110310_2010_A4_RFI_DOCDEREF_GB.ai 1 10/03/11 16:16
2010 REGISTRATION DOCUMENT AND ANNUAL FINANCIAL REPORT REGISTRATION DOCUMENT AND ANNUAL FINANCIAL REPORT 2010 1 PRESENTATION 6 INFORMATION ON THE PARENT OF THE BNP PARIBAS GROUP 3 COMPANY FINANCIAL STATEMENTS 297 1.1 Group presentation 4 6.1 BNP Paribas SA fi nancial statements 298 1.2 Key fi gures 4 Notes to the parent company financial statements 300 1.3 History 5 6.2 Appropriation of income and dividend distribution for the year ended 31 December 2010 329 1.4 Presentation of activities and business lines 6 6.3 BNP Paribas SA fi ve-year fi nancial summary 330 1.5 BNP Paribas and its shareholders 16 6.4 Subsidiaries and associated companies of BNP Paribas SA at 31 December 2010 331 CORPORATE GOVERNANCE 29 6.5 Details of equity interests acquired by 2 BNP Paribas SA in 2010 whose value exceeds 5% 2.1 Board of Directors 30 of the share capital of a French company 334 2.2 Report of the Chairman of the Board of Directors 6.6 Statutory Auditors’ report on the manner of preparation and organisation on the fi nancial statements 335 of the work of the Board and on the internal control procedures implemented by the company 42 2.3 Statutory Auditors’ report, prepared in accordance 7 SOCIAL AND ENVIRONMENTAL with Article L.225-235 of the French Commercial INFORMATION 337 Code on the report prepared by the Chairman of the Board of Directors 68 7.1. Human resources development 338 2.4 Executive Committee 70 7.2. NRE Appendices – Social chapter 357 7.3. NRE Appendices – Environmental chapter 366 3 2010 REVIEW OF OPERATIONS 71 3.1 BNP Paribas consolidated results 72 8 GENERAL INFORMATION 371 3.2 Core business results 73 8.1 Documents on display 372 3.3 Selected exposures based on Financial Stability 8.2 Material contracts 372 Board recommendations 82 8.3 Dependence on external parties 372 3.4 Balance sheet 90 8.4 Signifi cant changes 373 3.5 Profi t and loss account 93 8.5 Investments 373 3.6 Recent events 98 8.6 Founding documents and Articles of association 374 3.7 Outlook 99 8.7 Statutory Auditors’ special report on regulated agreements and commitments 379 4 CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN STATUTORY AUDITORS 381 ACCORDANCE WITH INTERNATIONAL 9 FINANCIAL REPORTING STANDARDS 9.1. Statutory Auditors 382 AS ADOPTED BY THE EUROPEAN UNION 101 4.1 Profi t and loss account for the year ended PERSON RESPONSIBLE 31 december 2010 104 10 FOR THE REGISTRATION DOCUMENT 383 4.2 Statement of net income and changes in assets and liabilities recognised directly in equity 105 10.1. Person responsible for the Registration document 4.3 Balance sheet at 31 december 2010 106 and the annual fi nancial report 384 4.4 Cash fl ows statement for the year ended 10.2. Statement by the person responsible 31 december 2010 107 for the Registration document 384 4.5 Statement of changes in shareholders’ equity between 1 jan. 2009 and 31 dec. 2010 108 TABLE OF CONCORDANCE 385 4.6 Notes to the fi nancial statements prepared in 11 accordance with International Financial Reporting Standards as adopted by the European Union 110 4.7 BNP Paribas Statutory Auditors’ report on the consolidated fi nancial statements 254
5 PILLAR 3 257 5.1 Scope of application 258 5.2 Risk management 262 5.3 Capital management and capital adequacy 263 5.4 Credit and counterparty risk 269 5.5 Market risk 286 5.6 Operational risk 289 5.7 Appendix: capital requirements of signifi cant subsidiaries 291 2010 Registration document and annual fi nancial report
Only the French version of the Registration document has been submitted to the AMF. It is therefore the only version that is binding in law. The original document was fi led with the AMF (French Securities Regulator) on 11 March 2011, in accordance with article 212–13 of the AMF’s General Regulations. It may be used in support of a fi nancial transaction only if supplemented by a Transaction Note that has received approval from the AMF. This document includes all elements of the annual fi nancial report specifi ed by Section I of article L.451-1-2 of the Code Monétaire et Financier and article 222–3 of the AMF’s General Regulations. A table allowing cross-referencing between the documents specifi ed in article 222–3 of the AMF’s General Regulations and the corresponding sections of this document is provided on page 385.
The English language version of this report is a free translation from the original, which was prepared in French. All possible care has been taken to ensure that the translation is an accurate presentation of the original. However, in all matters of interpretation, views or opinion expressed in the original language version of the document in French take precedence over the translation.
2010 Registration document and fi nancial report - BNP PARIBAS 1 2 2010 Registration document and fi nancial report - BNP PARIBAS PRESENTATION 1 OF THE BNP PARIBAS GROUP
1.1 Group presentation 4
1.2 Key fi gures 4 Results 4 Market capitalisation 4 Long term credit ratings 5
1.3 History 5
1.4 Presentation of activities and business lines 6 Retail banking 6 Investment solutions 9 Corporate and Investment Banking 12 BNP Paribas “Principal Investments” 15 Klépierre 15
1.5 BNP Paribas and its shareholders 16 Share capital 16 Changes in share ownership 17 Listing information 18 Key shareholder data 21 Creating value for shareholders 21 Communication with shareholders 23 Shareholder Liaison Committee 24 Dividend 25 Dividend evolution (euro per share) 25 BNP Paribas registered shares 26 Annual General Meeting 26 Disclosure thresholds 28
2010 Registration document and fi nancial report - BNP PARIBAS 3 PRESENTATION OF THE BNP PARIBAS GROUP 1 Group presentation
1.1 Group presentation 1
BNP Paribas, Europe’s leading provider of banking and fi nancial services, ■ BeLux Retail Banking,
has four domestic retail banking markets in Europe, namely in Belgium, ■ Europe-Mediterranean, France, Italy and Luxembourg. ■ BancWest, It is present in over 80 countries and has more than 200,000 employees, ■ Personal Finance, including over 160,000 in Europe. BNP Paribas holds key positions in its ■ three activities: Equipment Solutions; ■ Investment Solutions; ■ Retail Banking, which includes the following operating entities: ■ Corporate and Investment Banking (CIB). ■ French Retail Banking (FRB), BNP Paribas SA is the parent company of the BNP Paribas Group. ■ BNL banca commerciale (BNL bc), Italian retail banking,
1.2 Key fi gures
RESULTS
2006 2007 2008 2009 2010
Revenues (in millions of euros) 27,943 31,037 27,376 40,191 43,880 Gross operating income (in millions of euros) 10,878 12,273 8,976 16,851 17,363 Net income Group share (in millions of euros) 7,308 7,822 3,021 5,832 7,843 Earnings per share (in euros) (*) 7.81 8.25 2.99 5.20 6.33 Return on equity (**) 21.2% 19.6% 6.6% 10.8% 12.3% (*) Restated to account for the capital increases with maintained preferential subscription rights, carried out in 2006 and 2009. (**) Return on equity is calculated by dividing net income Group share (adjusted for interest on undated super-subordinated notes deemed equivalent to preferred shares issued by BNP Paribas SA and treated as a dividend for accounting purposes) by average equity attributable to equity holders at 1 January and 31 December of the period concerned (after distribution and excluding undated super-subordinated notes deemed equivalent to preferred shares issued by BNP Paribas SA).
MARKET CAPITALISATION
31/12/2005 31/12/2006 31/12/2007 31/12/2008 31/12/2009 31/12/2010
Market capitalisation (in billions of euros) 57.3 76.9 67.2 27.6 66.2 57.1 Source: Bloomberg.
4 2010 Registration document and fi nancial report - BNP PARIBAS PRESENTATION OF THE BNP PARIBAS GROUP History 1
LONG TERM CREDIT RATINGS 1 Standard and Poor’s: AA, negative outlook - rating confi rmed on 9 February 2011 Moody’s: Aa2, stable outlook - rating revised on 21 January 2010 Fitch: AA-, stable outlook - rating revised on 21 June 2010
1.3 History
1966 : Creation of BNP 1998 : Creation of Paribas The merger of BNCI and CNEP to form BNP represented the largest On 12 May 1998, the merger between Compagnie Financière de Paribas, restructuring operation in the French banking sector since the end of Banque Paribas and Compagnie Bancaire was approved. the Second World War. 1999 : A momentous year for the Group 1968 : Creation of Compagnie Financière de Paris Following an unprecedented double tender offer and a stock market battle et des Pays-Bas waged over six months, BNP was in position to carry out a merger of 1982 : Nationalisation of BNP and Compagnie equals with Paribas. For both groups, this was the most important event Financière de Paris et des Pays-Bas at the time since their privatisation. It gave rise to a new Group with tremendous of the nationalisation of all French banks prospects. At a time of economic globalisation, the merger created a In the 1980s, deregulation of the banking sector and the growing tendency leading player in the European banking sector. of borrowers to raise funds directly on the fi nancial market transformed 2000 : Creation of BNP Paribas the banking business in France and worldwide. BNP and Paribas merged on 23 May 2000. 1987 : Privatisation of Compagnie Financière Drawing on its strong banking and fi nancial services heritage, the new de Paribas Group’s objectives are to create value for shareholders, clients and With 3.8 million individual shareholders, Compagnie Financière de Paribas employees by building the bank of the future and becoming a leading had more shareholders than any other company in the world. Compagnie global player. Financière de Paribas owned 48% of the capital of Compagnie Bancaire. 2006 : Acquisition of BNL in Italy 1993 : Privatisation of BNP BNP Paribas acquired BNL, Italy’s 6th-largest bank. This acquisition BNP’s return to the private sector represented a new start. During the transformed BNP Paribas, providing it with access to a second domestic 1990s, new banking products and services were launched and fi nancial market in Europe. In both Italy and France, all of the Group’s businesses market activities were developed. At the same time, the Bank expanded can now develop their activities by leveraging a nationwide banking its presence in France and internationally, and prepared to reap the full network. benefi ts of the introduction of the euro. Privatisation also signifi cantly boosted the Bank’s profi tability – in 1998, it led the French banking 2009 : Merger with the Fortis group industry in terms of return on equity. BNP Paribas took control of Fortis Bank and BGL (Banque Générale du Luxembourg), thereby creating a European leader in retail banking, with four domestic markets.
2010 Registration document and fi nancial report - BNP PARIBAS 5 PRESENTATION OF THE BNP PARIBAS GROUP 1 Presentation of activities and business lines
1.4 Presentation of activities and business lines 1
RETAIL BANKING
BNP Paribas generated 54% of its 2010 revenues from retail banking FRENCH RETAIL BANKING and specialised financial services. Its retail banking networks have French Retail Banking (FRB) supports all its clients with their projects. It 22 million individual, professional and small business customers and has a client base made up of 6.7 million individual and private banking 200,000 corporate clients, whilst its specialist credit activities have clients, 600,000 entrepreneurs and small business clients, and 22,000 13 million active customers. Retail banking activities employ more than corporate and institutional clients. The division offers a broad line-up 148,000 staff in 52 countries, representing 72% of the Group’s headcount. of products and services, ranging from current account services to the Retail Banking operates branch networks, with a total of 7,300 branches most complex fi nancial engineering services in the areas of corporate including 6,500 in Europe and the Mediterranean Basin, together with fi nancing and asset management. specialised fi nancial services. It is divided into seven Operating Entities: The French Retail Banking Division network is strengthened every ■ French Retail Banking; year with a view to enhancing local coverage and client service. At ■ BNL bc, Italian retail banking; 31 December 2010, it consisted of 2,255 branches, of which over 1,460 had been refurbished with the “Welcome & Services” concept, and ■ BeLux Retail Banking, covering retail banking activities in Belgium and Luxembourg, a new entity created following the integration of Fortis; 5,620 cash dispensers. As such, the network is now more compatible with a multi-channel organisational structure. FRB focuses on regions ■ Europe-Mediterranean, covering retail banking activities in Central and with strong economic potential, notably with an 18% market share in the Eastern Europe, the Mediterranean Basin and West Africa; Paris region (5). FRB is characterised by a strong presence in the upper ■ BancWest, the retail banking network in the USA; affl uent segments of the retail market and a prominent position among ■ Personal Finance, comprising the specialist personal loan, consumer businesses with a penetration rate of 38% among companies with 50 or credit and mortgage fi nancing businesses; more employees (6) ■ Equipment Solutions, dedicated to fi nancing equipment for corporate The French Retail Banking Division employs 32,000 people working chiefl y clients. in the BNP Paribas branded branch network, as well as at Banque de Retail Banking’s creative structure is designed to encourage Bretagne, BNP Paribas Factor, BNP Paribas Développement, a provider cross-functionality between operating entities. Eight transversal of capital, and Protection 24, a remote surveillance fi rm. missions – Distribution, Markets & Solutions (DMS), IT Transverse, The role of the branch advisors has been strengthened in order to meet US Operations, Business Development, Wealth Management, Platforms, client expectations. Operations & Process (POP), HR, Brand & Communications – provide the The network is organised by client category: business lines with their expertise and work on shared cross-functional projects. ■ branches dedicated to individual, professional and business clients; The effectiveness of this structure and the integrated distribution and ■ 221 private banking centres, representing the most extensive private (7) origination business model was demonstrated during 2010. Through Retail banking coverage in France ; Banking, BNP Paribas is the euro zone’s leader in wealth management (1) ■ a unique network of 28 Business Centres dedicated to business and the European leader in consumer credit (2), cash management (3) and customers across the length and breadth of the country, as well as a equipment fi nancing for businesses(4) . Integration of the Retail Banking professional assistance service - “Service Assistance Enterprise (SAE)” networks and CIB has also made BNP Paribas one of the leading banks - and Cash Customer Services (CCS); serving companies seeking to expand in Europe. ■ 32 Small Business Centres which help entrepreneurs and small businesses to manage their wealth planning projects or projects related to their company’s lifecycle.
(1) Source: in-house study based on information published by competitors as at 30 September 2010. (2) Source: Annual Reports of personal fi nance companies. (3) Source: TMI, 2010. (4) Source: Leaseurope 2009 league tables reported in September 2010. (5) BNP Paribas French Retail Banking 2010 marketing research, percentage of adults living in the Paris region who are BNP Paribas clients. (6) BNP Paribas French Retail Banking 2010 marketing research. (7) Source: internal data.
6 2010 Registration document and fi nancial report - BNP PARIBAS PRESENTATION OF THE BNP PARIBAS GROUP Presentation of activities and business lines 1
This organisation is rounded out by a Client Relations Centre (CRC) and BNL bc has adopted a multi-channel distribution approach, organised into back-offi ces handling the processing of transactions. The Client Relations 5 regions (“direzioni territoriali”) with the Retail & Private Banking and Centre’s three platforms in Paris, Orléans and Lille deal with calls made Corporate Banking activities being run as separate structures: to the branches and process client e-mails. As for back-offi ces, the 1 ■ 104 retail districts (“distretti”) with over 860 branches; integrated Information Technology System is completed by Production ■ and Sales Support Units. Specialised by customer type, they span the 29 private banking centres; whole of France. At year-end 2010, 61 production units were in charge ■ 20 business centres with 52 branches dealing with small and medium of transaction processing. enterprises, large corporates, local authorities and public sector organisations. Complementing the NetÉpargne area of the bnpparibas.net website informing customers and enabling them to apply for savings accounts In addition, 5 Trade Centres provide companies with a range of products, and life insurance products, the “Net Crédit Immo” contact centre handles services and solutions for cross-border activities, complementing mortgage requests in less than 48 hours. BNP Paribas’ international network. At the same time, the network of Italian desks that assist Italian companies abroad as well as multinational FRB is also pursuing development in personal banking through its companies with direct investments in Italy now covers 10 countries, multi-channel approach encompassing automated banking systems in mainly in the Mediterranean area. branches, mobile internet account management, SMS text alerts, new online services and loans, and “NET Agence”, an online bank. The multi-channel offering is complemented by more than 1,900 Automated Teller Machines and over 25,000 points of sale with retailers, as well as telephone and online banking for both retail and business BNL BANCA COMMERCIALE clients. BNL banca commerciale (BNL bc) is one of the major players in the Italian This organisation is supported by specialised local back-offi ce units, which banking and fi nancial system, ranking 6th in terms of both total assets (1) work closely with the distribution network to improve the satisfaction and loans to customers (1). of both internal and external clients by delivering high-quality, effective services and better management of operational risk. BNL bc provides a comprehensive range of banking, financial and insurance products and services to meet the needs of its large and diversifi ed client base consisting of: BELUX RETAIL BANKING ■ around 2.5 million individuals and more than 16,000 private clients According to the integration plan, the activities of BNP Paribas Fortis (households); and BGL BNP Paribas were split into the different business lines of ■ over 157,000 business clients (with turnover under EUR 5 million); BNP Paribas Group and a new business line was created: BeLux Retail ■ 27,000 medium and large companies, with a particular focus on Large Banking, which encompasses the activities of retail and corporate banking Relationships (“Grandes Relations”), a sub-segment consisting of in Belgium and Luxembourg, the new domestic markets of the Group. around 450 groups with 1,500 operating companies; ■ 16,000 local authorities and non-profi t organisations. Retail & Private Banking (RPB) In retail and private banking, BNL bc has a strong position in lending BNP Paribas Fortis is the number one in personal banking in Belgium (4), (especially residential mortgages, with a market share of nearly 7%), with 3.7 million customers and high-ranking positions in all banking and a good deposits base (market share of about 3.5%) well ahead of its products. Retail customers are reached through a multichannel network penetration (2.6% in terms of branch numbers) (2). distribution strategy. The branch network comprises 1,014 branches BNL bc also has a longstanding tradition in supporting large companies plus 650 customer service points under the partnership with Banque de (5) and local authorities, boasting market shares of around 5% and 6% la Poste and 311 Fintro franchise outlets . respectively (2), with a well-established reputation in cross-border RPB’s Client Relationship Management (CRM) centre manages a network payments, project fi nancing and structured fi nance, as well as factoring of 2,300 cash dispensers, as well as online banking services (1.3 million (its specialised subsidiary Ifi talia ranks 3rd in Italy in terms of credit users), mobile banking and phone banking. outstandings and 2nd for turnover (3)). With 36 Private Banking centres, BNP Paribas Fortis is a major player in the Belgian private banking market. Its services are aimed at individual customers with assets of more than EUR 250,000. Wealth Management caters to about 1,500 clients with assets of more than EUR 4 million.
(1) Source: internal estimates based on published fi nancial information as at 30 September 2010. (2) Source: internal data and Bank of Italy statistics as at 30 September 2010. (3) Source: internal data and Assifact as at 31 December 2010. (4) Source: BNP Paribas Fortis research. (5) In December 2010, Fintro had 1,060 employees, over 336,257 customers and more than EUR 10.9 billion of deposits.
2010 Registration document and fi nancial report - BNP PARIBAS 7 PRESENTATION OF THE BNP PARIBAS GROUP 1 Presentation of activities and business lines
Corporate & Public Bank, Belgium (CPBB) BANCWEST CPBB offers a comprehensive range of local and international fi nancial In the United States, the retail banking business is conducted through 1 services to Belgian enterprises, public entities and local authorities. BancWest Corporation, a company formed out of the 1998 merger With more than 450 corporate clients and 34,100 midcap clients, it between Bank of the West and First Hawaiian Bank, wholly-owned by is the market leader in both those categories (1), and a challenger in BNP Paribas since the end of 2001. Until 2006, BancWest pursued a policy public banking with 1,300 clients. CPBB keeps very close to the market of acquisitions to develop its franchise in western America. through its team of more than 60 corporate bankers and 200 relationship Bank of the West markets a very broad range of retail banking products managers operating out of 22 Business Centres, supported by specialists and services to individuals, small businesses and corporate clients in specifi c areas. in 19 states in western and mid-western America. It also has strong positions across the USA in certain niche lending markets, such as marine, Retail and Corporate Banking Luxembourg (BDEL) recreational vehicles, church lending, small business and agribusiness. BDEL provides a broad range of fi nancial products and services to its With a market share of more than 40% in deposits (5), First Hawaiian Bank private and professional clients, as well as corporates through a network is Hawaii’s leading bank, offering banking services to a local clientele of of 37 branches. private individuals and businesses. BGL BNP Paribas is the second retail bank in Luxembourg in terms of In total, with 11,300 employees, 769 branches and total assets of more services for individuals, with a total of 223,000 resident customers than USD 73 billion at 31 December 2010, BancWest currently serves representing a market share of 16% (2). It is the leading commercial bank some 5 million client accounts. It ranks as the 7th largest commercial with 36,000 corporate clients representing a market share of 38% (3). bank in the western United States by deposits (5).
Wealth Management Luxembourg PERSONAL FINANCE Wealth Management provides high-net-worth clients with integrated, customised financial planning and wealth management solutions. BNP Paribas Personal Finance: Europe’s number These high-potential clients enjoy a multilingual offering covering a one in personal fi nance (6) broad international array of tailored wealth management products and solutions, including discretionary portfolio management and insurance. Within the BNP Paribas Group, BNP Paribas Personal Finance specialises BGL BNP Paribas is the leading private bank in Luxembourg (4). in personal loans through its consumer credit and mortgage lending activities. With nearly 29,000 employees in more than 30 countries and on 4 continents, BNP Paribas Personal Finance ranks as the leading player EUROPE MEDITERRANEAN in France and Europe (6). Europe Mediterranean (EM) operates a network of 2,220 branches in BNP Paribas Personal Finance markets a comprehensive range of some ten countries. It is present in Turkey, Central and Eastern Europe solutions available at the point of sale (stores, car dealerships), (Poland and Ukraine) and the southern Mediterranean Basin (Morocco, through authorised business providers (brokers, estate agents, property Algeria, Tunisia, Egypt) and in sub-Saharan Africa. EM is gradually rolling developers) or directly via its customer relations centres and over the out the integrated retail banking model of the BNP Paribas group which internet. has proved so successful in its domestic markets by providing local Furthermore, BNP Paribas Personal Finance has made partnerships an customers with the expertise for which the BNP Paribas group has a strong area of specialisation in its own right underpinned by its expertise in competitive position in the market (dynamic customer segmentation, providing all types of fi nancing and services geared to the activities and cash management, trade fi nance, multichannel distribution, specialised commercial strategy of its partners. As a result, BNP Paribas Personal fi nancing, wealth management, etc.). Finance has become a key partner for retail chains, service providers, In June 2010, BNP Paribas and the Colakoğlu group, co-shareholders of banks and insurance companies. TEB - Türk Ekonomi Bankasi A.Ş. - since 2005, and BNP Paribas Fortis entered into a memorandum of understanding regarding the merger of TEB and Fortis Bank Turkey. The merger was approved by the shareholders of the two banks on 25 January 2011 and was legally completed on 14 February 2011.
(1) Source: TNS survey. (2) Source: ILRES survey, October 2010. (3) Source: ILRES survey, November 2010. (4) Euromoney 2010 league tables. (5) Source: SNL Financial, 30 June 2010. (6) Source: Annual Reports of personal fi nance companies.
8 2010 Registration document and fi nancial report - BNP PARIBAS PRESENTATION OF THE BNP PARIBAS GROUP Presentation of activities and business lines 1
Core commitment to responsible lending Equipment Solutions consists of five international business lines organised by assets and specially designed rental solutions: BNP Paribas Personal Finance is committed to responsible lending, in particular through Cetelem and Findomestic, both in practice and in ■ Arval for cars and light commercial vehicles; 1 its communications. Its vision of personal fi nance consists of making a ■ Equipment & Logistics Solutions for public works, farm and transport sustained contribution to improving the personal and social quality of equipment; consumers’ lives, through four main vectors: ■ Technology Solutions for offi ce equipment, hardware and software, ■ developing a product and service offering tailored to customer telecoms, medical and retail trade equipment; expectations; ■ Specialised Assets Solutions provides centres of expertise in specialised ■ improving access to lending for as many people as possible; high-value asset markets (real estate for investors, fl ight simulators, business jets, port infrastructure, etc.); ■ supporting customers with individual solutions that meet their specifi c needs; ■ Bank Leasing Services provides leasing products to BNP Paribas bank customers. ■ combating overindebtedness. In France, BNP Paribas Personal Finance provides the general public Despite the still fragile economic recovery, Equipment Solutions continues with information about personal loans on its non-commercial web site: to enjoy strong business momentum and has become European leader in (1) www. moncreditresponsable.com. equipment fi nancing both in terms of outstandings and new business . Since 2007, BNP Paribas Personal Finance has supported the development In 2010, Arval posted strong 10% growth in its leased fl eet, with a 27% of personal micro fi nance guaranteed by the Fonds de Cohésion Sociale. increase in the number of vehicles purchased to 180,557. At end-2010, At the end of 2010, it had granted more than 200 micro loans totalling it had a total leased fl eet of 667,458 vehicles. Arval is a major European (2) EUR 428,111. player in full service vehicle leasing and number one in France and Italy (3) in terms of leased vehicles. BNP Paribas Lease Group has changed its name to BNP Paribas Leasing EQUIPMENT SOLUTIONS Solutions to better refl ect the shift in its offering towards services and Equipment Solutions, through a multi-channel approach (direct sales, solutions that create value for its customers and partners. sales via referrals or via partnerships), offers corporate and business It arranged over 267,000 fi nancing deals in 2010, bringing its total clients a range of rental solutions, ranging from equipment fi nancing outstandings up to EUR 25.6 billion at the year-end (4). to fl eet outsourcing.
INVESTMENT SOLUTIONS
BNP Paribas Investment Solutions provides a unique range of solutions In 2010, the Investment Solutions businesses all held leading positions to meet all the present and future needs of institutional, corporate and in their market. retail investors: Investment Solutions operates in 68 countries and employs almost 30,000 ■ Asset management (BNP Paribas Investment Partners); people representing more than 70 different nationalities. It continues to ■ Insurance (BNP Paribas Assurance); expand its international reach, mainly in Europe, Asia, Latin America and the Middle East, through new operations, acquisitions, joint ventures and ■ Wealth management (BNP Paribas Wealth Management); partnership agreements. ■ Savings and online brokerage (BNP Paribas Personal Investors); Investment Solutions’ experts always endeavour to offer the products ■ Securities services (BNP Paribas Securities Services); and services that are best suited to client expectations in terms of ■ Real estate services (BNP Paribas Real Estate). transparency, performance and security, while meeting the strictest sustainable development standards.
(1) Source: Leaseurope 2009 league tables published in September 2010. (2) Source: Syndicat National des Loueurs Véhicules Longue Durée (SNLVLD) data, 3rd quarter 2010. (3) FISE ANIASA (Federazione Imprese di Servizi - Associazione Nazionale Industria dell’Autonoleggio e Servizi Automobilistici), Italy, 3rd quarter 2010. (4) Amounts after servicing transfer.
2010 Registration document and fi nancial report - BNP PARIBAS 9 PRESENTATION OF THE BNP PARIBAS GROUP 1 Presentation of activities and business lines
BNP PARIBAS INVESTMENT PARTNERS BNP Paribas Assurance has three major distribution channels: BNP Paribas Investment Partners (BNPP IP) is the asset management ■ BNP Paribas retail branch networks (in France, Italy, Belgium, 1 arm of the BNP Paribas Group and is comprised of a unique network of Luxembourg, Turkey, Ukraine, etc.); 26 specialised partners worldwide. ■ banks, fi nancial institutions and major retailers; A global investment solution provider, BNPP IP has three distinct groups ■ digital & brokers: networks of independent fi nancial advisors and of investment expertise: distance networks such as telemarketing and Internet. Multi-expertise investment capabilities: BNP Paribas Asset Management, BNP Paribas Assurance holds strong positions on three continents: the largest partner, encompasses the major asset classes with investment Europe, Asia and Latin America. It is a world leader in loan protection teams operating in all the major markets. insurance (4) and among the top 15 insurers in Europe (4). Specialist Investment Partners: specialists in a particular asset class or fi eld (mainly alternative and multi-management), operating as boutique- Strong culture of partnerships like structures. BNP Paribas Assurance’s strength and distinguishing features are Local and regional solution providers: local asset managers covering a predicated primarily on its ability to: specifi c geographical region and/or clientele, the majority in emerging ■ offer customised products to meet the needs of its various partners; markets. ■ build a major profi t centre for its partners; (1) With over EUR 546 billion in assets under management (USD 730 ■ satisfy its clients’ demand for high standards of service and billion) and 4,000 staff operating in 45 countries, BNPP IP offers a full transparency through its Customer Centric Program. range of investment management services to both institutional clients and distributors wherever they are located. BNPP IP has offi ces in the world’s major fi nancial centres, including Hong WEALTH MANAGEMENT Kong, London, New York, Paris and Tokyo. It has a strong presence in a BNP Paribas Wealth Management encompasses BNP Paribas’ private large number of emerging markets with local teams – in China, Russia, banking activities. As part of an integrated approach to client relationships, Brazil, Indonesia, India and Turkey – enabling it to adapt its offering to Wealth Management offers its clients security coupled with innovative the needs of each market. This is why BNPP IP can be considered both product and service capability. a global investor and a local partner. It provides high value-added products and services designed to meet the The merger in 2010 with Fortis Investment also had a positive effect needs of a sophisticated clientele. This range includes: on BNPP IP’s position in the league tables. Based on assets under ■ wealth management services: estate planning and advice on asset management as at 31 December 2010, BNPP IP ranks no. 5 in Europe (2). structures; BNP Paribas Investment Partners combines the financial strength, ■ fi nancial services: advise on asset allocation, investment products and distribution network and the rigorous management of BNP Paribas with securities, notably discretionary portfolio management; the reactivity, specialisation and entrepreneurial spirit of investment ■ expert advice in specifi c areas, such as art, real estate and philanthropy. boutiques. In an environment strongly affected by new regulations, the business is now organised on the basis of four geographies: Domestic Markets INSURANCE (excluding Luxembourg), Luxembourg, Europe International (including the Middle East and Latin America), and Asia-Pacifi c. BNP Paribas Assurance insures people, their families and their goods. It designs and markets its savings and protection products and services The new organisational structure is designed to meet the following under two brand names: BNP Paribas and Cardif. objectives: Its distribution partners include 35 of the world’s top 100 banks, major ■ support the development of the wealth management business in retailers and many fi nancial institutions. countries where the Group has a retail banking clientele; Products: ■ gain or strengthen positions through close cooperation with Corporate & Investment Banking and through partnerships or acquisitions; ■ the savings business encompasses capitalisation as well as individual ■ and group pension contracts; increase cross-functionality between geographies and support functions. ■ the protection business covers a broad range of products including loan protection insurance, extended warranties, credit card and cheque The four geographies draw on the expertise of the business line’s book protection, invoice protection, gap insurance (3), individual and support teams in fi nancial planning and asset management as well as group personal risk insurance, property and casualty insurance and diversifi cation. It sources solutions from the Group’s other businesses health insurance. (Investment Partners, Securities Services, Insurance, Corporate Finance,
(1) Including assets under advisory. (2) Source: internal data. (3) Insurance covering the difference between the vehicle’s value and the loan outstanding in the event of theft or damage. (4) Source: in-house study based on information published by competitors.
10 2010 Registration document and fi nancial report - BNP PARIBAS PRESENTATION OF THE BNP PARIBAS GROUP Presentation of activities and business lines 1
Fixed Income and Equity Derivatives), as well as from selected external At 31 December 2010, BNP Paribas Personal Investors (3) had 1.3 million product and service providers. In addition, to strengthen its ability to customers and EUR 33 billion in assets under management, of which 39% attract and advise the world’s largest fortunes, BNP Paribas Wealth was invested in equity assets, 38% in savings products or mutual funds Management has set up a specialised UHNWI (Ultra High Net Worth and 23% in cash. BNP Paribas Personal Investors employs over 4,100 staff. 1 Individuals) team responsible for global coverage of this segment. BNP Paribas Personal Investors’ goal is to strengthen its leadership BNP Paribas Wealth Management ranks as no. 6 worldwide and no. 4 in position in Europe and in emerging markets that enjoy strong savings Western Europe in private banking with almost EUR 254 billion in assets capacity. under management at year-end 2010 and over 6,100 professionals in almost 30 countries (1). In France, it ranks no. 1 with EUR 69 billion in assets under management (1). BNP PARIBAS SECURITIES SERVICES BNP Paribas Securities Services is a top fi ve global provider of securities services (4). Assets under custody expanded in 2010 by +12.9% over PERSONAL INVESTORS 2009 to EUR 4,641 billion. Assets under administration grew by +5.8% BNP Paribas personal investors provides independent fi nancial advice to EUR 771 billion and the number of funds rose by +0.7% to 6,329. The and a wide range of investment services to individual clients. It brings number of transactions settled declined by -5.1% to 47 million, against together three players: a background of very low activity in the fi nancial markets.
■ Cortal Consors, Europe’s leading online savings and brokerage player BNP Paribas Securities Services provides integrated solutions for all for individuals (2), provides personalised investment advice and online operators involved in the investment cycle: sell side, buy side and issuers. trading services to over one million clients in Germany, France and ■ Investment banks, broker-dealers, banks and market infrastructures Spain. Cortal Consors offers clients its investment advisory experience are offered customised solutions in execution services, derivatives through several channels – online, telephone and face to face. Its clearing, local and global clearing, settlement/delivery and custody broad range of independent products and services includes short-term for all onshore and offshore asset classes worldwide. Outsourcing investment solutions, mutual funds and life insurance. solutions for middle and back-offi ce activities are also provided; ■ B*capital, an investment firm, specialises in personalised advice ■ Institutional investors (asset managers, alternative fund managers, on listed securities and derivatives as well as portfolio advisory sovereign wealth funds, insurance companies, pension funds, fund and discretionary portfolio management for affluent clients. It distributors and promoters) have access to an array of services. These provides clients with direct access to all markets, fi nancial analysis, include global custody, depository bank and trustee services, transfer personalised portfolio advisory and portfolio management services. agency and fund distribution support, fund administration and middle- B*capital is the majority shareholder in investment fi rm Portzamparc, offi ce outsourcing, investment reporting and risk and performance which specialises in small and mid caps. measurement; ■ Geojit BNP Paribas is one of the leading retail brokers in India. It ■ Issuers (originators, arrangers and corporates) are provided with a provides brokerage services for equities, derivatives and fi nancial wide range of corporate trust solutions: securitisation and structured savings products (funds and life insurance) by phone, online and via fi nance services, debt agency services, issuer advisory, stock option a network of more than 500 branches. Geojit BNP Paribas also operates and employee stock plans, shareholder services and management of in the United Arab Emirates, Saudi Arabia, Oman, Bahrain and Kuwait, Annual General Meetings; where it targets mainly a non-resident Indian clientele. ■ Market and fi nancing services are provided across all client types. In Luxembourg and Singapore, BNP Paribas Personal Investors provides These include securities lending and borrowing, foreign exchange, products and services to an international and expatriate clientele. credit and collateral management, and cash fi nancing.
(1) Source: in-house study based on information published by competitors at 30 September 2010. (2) Source: in-house study based on information published by competitors. (3) With Geojit included at a rate of 34.33%. (4) Source: BNP Paribas Securities Services’ fi gures for assets under custody, 31 December 2010; globalcustody.net competitors’ assets under custody tables, 2 February 2011.
2010 Registration document and fi nancial report - BNP PARIBAS 11 PRESENTATION OF THE BNP PARIBAS GROUP 1 Presentation of activities and business lines
BNP PARIBAS REAL ESTATE Transaction With 3,300 employees, BNP Paribas Real Estate is ranked second as ■ commercial property: approximately 7.7 million sq. m of commercial 1 continental Europe’s provider of real estate services to corporates (1) and property let in 2010 (offi ce, light industrial, retail space, etc.). No. 1 in one of France’s major players in residential property (2). France, Germany and Luxembourg (3); ■ Its offering is unique in terms of its geographical reach and the diversity residential property: more than 3,950 new housing units marketed of its business lines. Its client base encompasses corporate occupiers, in 2010. investors, local authorities, property developers and individuals. Consulting ■ advising clients on their real estate projects and optimising their asset International network portfolios. ■ In commercial real estate, BNP Paribas Real Estate supports its Valuation customers in 30 countries worldwide: ■ 84,000 appraisals carried out in 2010 on all types of real estate assets ■ 15 countries with direct operations: (offi ces, retail, hotels, warehouses, land, etc.); ■ Europe: Germany, Belgium, Spain, France, Hungary, Ireland, Italy, ■ no. 1 in France (3). Jersey, Luxembourg, Poland, Czech Republic, United Kingdom, Romania, Property Management ■ ■ India and the Gulf countries; commercial property: 30 million sq. m managed. No. 1 in France, Belgium and Luxembourg (3); ■ 15 other countries through alliances with local partners; ■ residential property: over 6,000 housing units managed in student ■ In residential real estate, BNP Paribas Real Estate’s is mainly active in France. residences and serviced apartments for business users. Investment Management Six complementary real estate business lines ■ almost EUR 11 billion of real estate assets managed in France, Property development Italy, Luxembourg, United Kingdom and Belgium. One of the leading managers of non-trading property investment trusts in France (3). ■ 50,000 sq. m of commercial property and 3,200 housing units started in 2010; ■ ranked among the top French real estate developers (2).
CORPORATE AND INVESTMENT BANKING
BNP Paribas Corporate & Investment Banking (CIB) employs 19,800 people its ability to adapt to the new economic and fi nancial challenges facing the across more than 50 countries. CIB provides its clients with fi nancing, banking industry and its clients. In 2010, BNP Paribas CIB strengthened advisory and capital markets services. During 2010, CIB made a signifi cant its European leadership and further developed its international activities, contribution to the BNP Paribas Group’s revenues (27% of total revenues) consolidating its role as European partner of choice for many corporates and earnings (41% of pre-tax net income). and fi nancial institutions worldwide. BNP Paribas CIB has 14,000 clients, consisting of corporates, fi nancial institutions and investment funds, which are central to BNP Paribas STRUCTURED FINANCE (SF) CIB’s strategy and business model. Staff’s main aim is to develop and maintain long-term relationships with clients, to support them in their Structured Finance (SF) operates at the crossroads of the lending and expansion or investment strategy and provide global solutions to meet capital markets activities. It designs customised fi nancing solutions for a their fi nancing, advisory and risk management needs. global clientele. With a presence in almost 40 countries and over 2,000 experts, SF offers a full range of fi nancing solutions, from the origination, As an integral part of a robust, well-known group and drawing on its structuring and execution of structured debt through syndication. client-focused business model, BNP Paribas CIB continued to demonstrate Structured Finance also includes CIB’s fl ow banking activities.
(1) Source: Property Week, June 2010. (2) Source: Innovapresse property developer league tables, September 2010. (3) Source: internal data.
12 2010 Registration document and fi nancial report - BNP PARIBAS PRESENTATION OF THE BNP PARIBAS GROUP Presentation of activities and business lines 1
In 2010, in a persistently diffi cult market, SF sealed a large number of CTBE operates in 18 counties (Germany, Austria, Bulgaria, Denmark, Spain, deals that contributed to fi nancing the economy. It fi nances its clients’ Greece, Hungary, Ireland, Israel, Norway, The Netherlands, Portugal, Czech investment and expansion projects by providing customised integrated Republic, Romania, United Kingdom, Russia, Sweden and Switzerland) and solutions geared to their specifi c needs. Clients therefore benefi t from has 32 business centres. A team of 200 relationship managers, 40 Cash 1 an end-to-end offering combining product expertise with dedicated sales Management specialists and 25 Trade Solutions specialists serve 8,000 teams. clients. CTBE works in cooperation with the relevant branch networks which provide corporate banking services in the Group’s four domestic SF plays a prominent role in energy and commodities fi nancing, asset markets. fi nancing (aircraft, maritime, real estate), export fi nancing, leveraged financing, project financing, corporate acquisition financing, trade fi nancing, cash management and loan syndication. CORPORATE FINANCE Once again in 2010, SF won a number of awards refl ecting the excellence Corporate Finance offers its clients advisory services for mergers and of its teams and the quality of its achievements: acquisitions, primary equity capital market transactions and fi nancial ■ Aircraft Finance Innovator of the Year (Jane’s Transport Finance 2011); restructuring. The Mergers & Acquisitions (M&A) teams advise both ■ EMEA (Europe, Middle East and Africa) & Latin American Loan House buyers and targets and also offer advice on strategic fi nancial issues (IFR 2010); and privatisations. Primary capital market services include Initial Public Offerings (IPOs), equity issues, secondary placements, and convertible/ ■ Best Commodity Finance Bank (GTR 2010); exchangeable bond issues. It employs 400 professionals in a global ■ Excellence in Energy Markets (Commodities Now/Energy Business network based on two main platforms, one in Europe and one in Asia, 2010); and a growing presence in the Middle East, Africa and the Americas. ■ Excellence in Corporate Social Responsibility (Commodities Now/ In M&A, BNP Paribas has consolidated its European expansion, Energy Business 2010); ranking no. 1 in France (Thomson Reuters and Dealogic, announced ■ Best Global Infrastructure & Project Finance House (Euromoney 2010); and completed deals) and no. 6 in the United Kingdom (Bloomberg, ■ No. 1 MLA (Mandated Lead Arranger) for all ECA Backed Loans announced deals) in 2010. In Asia (excluding Japan), the Bank ranks no. 5 (Dealogic 2010); (Thomson Reuters, completed deals) and was awarded “Best Domestic ■ No. 1 Bookrunner and MLA for Syndicated Loans in EMEA by Volume M&A/Best Privatization: Guangzhou Automotive Group USD 3.2 billion and Number of Deals (Thomson Reuters 2010); Privatization of Denway Motors and H-Share IPO”, by The Asset. It has also gained a strong foothold in Africa and the Middle-East where it now ■ No. 1 Bookrunner and MLA in EMEA in Acquisition/Demerger Finance ranks no. 2 (Bloomberg, announced deals); this strength is underlined by Volume and Number of Deals (Dealogic 2010); by the following awards: ■ No. 1 Bookrunner and MLA for Media & Telecom in EMEA by Volume ■ ”Cross Border Deal of the Year - Zain-Bharti Airtel” (Acquisitions and Number of Deals (Dealogic 2010). Monthly); ■ ”MENA Advisor of the Year” (Acquisitions Monthly); CORPORATE AND TRANSACTION BANKING ■ ”Best M&A House in Kuwait” (emeafi nance). EUROPE In the primary equity markets, BNP Paribas has consolidated its European Corporate and Transaction Banking Europe (CTBE), created in leadership, winning the no. 1 spot in 2010 as bookrunner for equity- February 2010, is the cornerstone for BNP Paribas’ strategy of becoming linked deals (Dealogic) and named “EMEA Structured Equity House” by “THE bank for corporates in Europe”. CTBE provides its corporate clients IFR. BNP Paribas also ranks no. 10 in EMEA as bookrunner for “All Equity with both day-to-day corporate banking services in liaison with the Capital Markets” deals (Dealogic) and won the following awards: competence centres Global Cash Management, Global Trade Solutions ■ ”Europe Equity Deal of the Year 2010” awarded by The Banker for the and Global Factoring, and a full range of investment banking services “Cable & Wireless – GBP 230 million Convertible Bond” deal, for which from CIB’s other business lines. BNP Paribas acted as bookrunner; CTBE targets a local clientele of large and mid caps and the local ■ ”Best Equity House in France” (Euromoney). subsidiaries of BNP Paribas’ customers from all regions. Clients are served In Asia, BNP Paribas won the following awards: equally whether they come from CIB, a domestic retail market or another retail banking entity. ■ ”Best Small-Cap Equity: Huiyin Household Appliances USD 69.3 million IPO” BNP Paribas Global Coordinator, awarded by The Asset in the With its corporate banking focus, CTBE offers to all its clients fi nancing, “Triple A Regional Awards 2010”; cash management and trade solutions. It works hand in hand with BNP Paribas Factor and Arval to distribute a range of leasing and factoring ■ ”Asia Pacifi c Financial Institutions Group Capital Raising Deal of the solutions. It also joins with the other CIB business lines to offer their Year 2010” awarded by The Banker for the “Shinhan Financial Group – products and services to its clients, and particularly the Fixed Income USD 1 billion Rights Issue”, for which BNP Paribas acted as Joint Lead business line for simple interest rate and exchange rate hedging solutions. Manager and Underwriter.
2010 Registration document and fi nancial report - BNP PARIBAS 13 PRESENTATION OF THE BNP PARIBAS GROUP 1 Presentation of activities and business lines
GLOBAL EQUITIES & COMMODITY The business line covers a broad range of products and services, including DERIVATIVES origination, syndication, trading, distribution, ecommerce, structuring and research. The division’s global network of fi xed income experts has built a 1 BNP Paribas CIB’s Global Equities & Commodity Derivatives (GECD) large and diversifi ed client base of asset managers, insurance companies, division offers equity derivatives and commodity derivatives products, banks, corporates, governments and supranational organisations. indices and funds as well as research and brokerage services in Asian equities. It employs 1,400 front-offi ce professionals operating in three Teams of dedicated experts in each region help to fi nance the economy major regions (Europe, America, Asia-Pacifi c). by meeting client needs with fi nancing solutions such as bond issues. Fixed Income also offers its institutional client base new investment GECD is organised into three business lines: opportunities, liquidity sources and solutions to manage various types Structured Equity provides structured solutions to a broad clientele of risk, such as interest rate, infl ation, foreign exchange and credit risk. including retail customers, corporate clients, banking networks, insurance In 2010, Fixed Income brought its clients real added-value, as illustrated companies and pension funds. It provides customised or exchange-traded by its rankings in the offi cial league tables and awards won: structured products to meet their needs in capital protection, yield and diversifi cation. 2010 rankings
Flow and Financing covers products and services required by institutional ■ no. 1 bookrunner for euro bond issues, among the top 10 bookrunners investors to implement their investment, hedging and portfolio for global bond issues in all currencies (Thomson Reuters Bookrunner optimisation needs in a multitude of markets and underlyings. These Rankings 2010); products and services encompass flow derivatives, stock lending, ■ no. 5 in all interest rate products all currencies combined and no. 3 prime brokerage and execution, as well as Asian equities research and in euro infl ation products (Total Derivatives/Euromoney Interest Rate brokerage. Derivatives Survey 2010); Commodity Derivatives provides a range of hedging solutions to corporate ■ no. 3 in global credit derivatives (Risk Institutional Investor Survey clients whose business is highly correlated with commodity prices 2010); (producers, refi neries and transport companies). It also provides investors ■ no. 2 in forex services for fi nancial institutions (Asiamoney FX Poll with access to commodities through various investment strategies and 2010); structured solutions. ■ no. 2 in credit research in the “banks”, “ non-bank fi nancial institutions” An entity dedicated to the Emerging Markets completes the structure to and “consumer products” sectors, and no. 5 in credit strategy and meet the growing interest in investing in this area, as well as the specifi c trading ideas (Euromoney Fixed Income Research Poll 2010); needs of emerging and growth market clients. ■ no. 1 derivatives dealer in Asia, no. 1 currency derivatives in Asia, no. 2 2010 awards credit derivatives in Asia, no. 2 interest rate derivatives in Asia (AsiaRisk Interdealer Rankings 2010). GECD’s expertise and know-how was recognised in 2010 by the following awards: 2010 awards ■ Best Global Equity Derivatives House (Euromoney 2010); ■ Structured Products House of the Year (Risk 2010); ■ Best Equity Structured Products for Super Sprinter (Finance Asia 2010); ■ Euro Bond House of the Year (IFR 2010); ■ Structured Products House of the Year (Risk 2011); ■ EMEA Investment-Grade Corporate Bond House of the Year (IFR 2010); ■ Derivatives House of the Year (The Asset Triple A Investment Awards ■ Covered Bond House of the Year (IFR 2010); 2010); ■ FX House & Interest Rates House (Structured Products Europe Awards ■ Emissions Europe - House of the Year (Energy Risk 2010); 2010); ■ Excellence in Corporate and Social Responsibility (Commodity Business ■ Most Innovative in FX (The Banker 2010); Awards 2010). ■ Derivatives House of the Year in Asia-Pacifi c, Best Derivatives House- Institutional & Best Credit Derivatives House (The Asset Asian Awards FIXED INCOME 2010). BNP Paribas CIB’s Fixed Income division is a global provider of solutions in the interest rate, foreign exchange (FX) and credit markets. With headquarters in London, six other trading fl oors in Paris, New York, São Paulo, Hong Kong, Singapore and Tokyo, and additional regional offi ces throughout Europe, the Americas, the Middle East and Asia-Pacifi c, the business has around 2,000 staff globally.
14 2010 Registration document and fi nancial report - BNP PARIBAS PRESENTATION OF THE BNP PARIBAS GROUP Presentation of activities and business lines 1
BNP PARIBAS “PRINCIPAL INVESTMENTS” 1 BNP Paribas Principal Investments manages the Group’s portfolio of listed funds). It identifi es and analyses investment opportunities, structures and unlisted investments and emerging market sovereign debt. transactions, manages investments with a view to extracting value in the medium-term and organises the disposal of mature investments. LISTED INVESTMENT MANAGEMENT The Listed Investment Management unit acquires and manages minority EMERGING MARKET SOVEREIGN DEBT interests in listed companies on behalf of the Group. Investments are MANAGEMENT generally made in large caps and the portfolio comprises mostly French The Sovereign Debt Management unit’s role is to: companies. The unit’s mission is to extract the greatest possible value ■ monitor, on the Group’s behalf, restructurings of emerging market from its assets over the medium term. sovereign debt in default or in diffi culties and take part in or chair specially-created credit committees (London Club Committees); UNLISTED INVESTMENT MANAGEMENT ■ manage the portfolio of emerging market sovereign debt housed in Principal Investments, with a view to extracting value in the medium- The Unlisted Investment Management unit manages the Group’s term. portfolio of interests in unlisted companies (direct and indirect through
KLÉPIERRE
Klépierre is an owner, manager and developer of shopping centres, At 31 December 2010, Klépierre’s portfolio was valued at EUR 15.1 billion providing major international retailers with a unique platform for their (excluding transfer duties) and the company employed 1,500 people. expansion in continental Europe through its portfolio of 356 managed Klépierre and Klémurs, both of which are SIICs (French REITs), are listed shopping centres, 273 of which are also owned by Klépierre. The on compartment A and compartment C respectively of Euronext ParisTM. Group operates in 13 European countries, including France, Belgium, (2) Norway, Sweden, Denmark, Italy and Spain. Ségécé and Steen & Strøm, The Klépierre group in Europe : subsidiaries of Klépierre, are the leading shopping centre managers in ■ 13 countries; continental Europe and Scandinavia respectively (1). ■ 1,500 employees; Klépierre also offers sale & lease back solutions in out-of-town and city- ■ EUR 15.1 billion portfolio value (excluding transfer duties); centre locations in France through its subsidiary Klémurs. ■ 273 shopping centres owned; Furthermore, Klépierre owns and manages a portfolio of offi ce buildings ■ 356 shopping centres managed. concentrated in the main business districts of Paris and inner suburbs (3.6% of the portfolio at 31 December 2010).
(1) Source: internal data. (2) At 31 December 2010.
2010 Registration document and fi nancial report - BNP PARIBAS 15 PRESENTATION OF THE BNP PARIBAS GROUP 1 BNP Paribas and its shareholders
1.5 BNP Paribas and its shareholders 1
SHARE CAPITAL
At 31 December 2009, BNP Paribas’ share capital stood at ■ 3,700,076 shares were issued under an employee share offering. EUR 2,368,310,748 divided into 1,184,155,374 shares. Details of the Thus, at 31 December 2010, BNP Paribas’ share capital stood at historical evolution of the capital are provided in the “Changes in share EUR 2,396,307,068 divided into 1,198,153,534 shares with a par value capital and earnings per share” section. of EUR 2 each (1). In 2010, fi ve series of transactions led to changes in the number of The shares are all fully paid-up and are held in registered or bearer form ordinary shares outstanding: at the choice of their holders, subject to compliance with the relevant ■ 1,737,512 shares were issued through the exercise of stock options; legal provisions. None of the Bank’s shares entitle their holders to an increased dividend or double voting rights or limit the exercise of voting ■ 354 shares were issued following the merger between Fortis Banque rights. France and BNP Paribas; ■ 9,160,218 shares were issued as a result of shareholders opting to receive their 2009 dividends in shares; ■ 600,000 shares were cancelled;
(1) Since the end of the fi nancial year, 506,622 shares have been created following the exercise of options. As a result, at 17 January 2011, BNP Paribas’ share capital stood at EUR 2,397,320,312 divided into 1,198,660,156 shares with a par value of EUR 2 each.
16 2010 Registration document and fi nancial report - BNP PARIBAS PRESENTATION OF THE BNP PARIBAS GROUP BNP Paribas and its shareholders 1
CHANGES IN SHARE OWNERSHIP 1 Changes in the Bank’s ownership structure over the last three years are as follows: Date 31/12/08 31/12/09 31/12/10 Number % of % of Number % of % of Number % of % of of shares share voting of shares share voting of shares share voting Shareholder (in millions) capital rights (in millions) capital rights (in millions) capital rights SFPI (*) - - 127.75 10.8% 10.8% 127.75 10.7% 10.7% AXA 53.08 5.8% 5.9% 61.63 5.2% 5.2% 61.65 5.1% 5.2% Gd. Duchy of Luxembourg - - - 12.87 1.1% 1.1% 12.87 1.1% 1.1% Employees 57.69 6.3% 6.4% 67.69 5.7% 5.8% 69.63 5.8% 5.8% - o/w corporate mutual funds 42.75 4.7% 4.7% 49.43 4.2% 4.2% 50.84 4.2% 4.2% - o/w direct ownership 14.94 1.6% 1.7% 18.26 1.5% 1.6% 18.79 1.6% 1.6% Corporate offi cers 0.43 nm nm 0.48 nm nm 0.47 nm nm Treasury shares (**) 5.46 0.6% 3.66 0.3% - 2.99 0.3% - Retail shareholders 64.36 7.1% 7.1% 63.63 5.4% 5.4% 66.00 5.5% 5.5% Institutional investors 717.75 78.8% 79.2% 780.17 65.9% 66.1% 849.37 70.9% 71.1% (o/w “Socially Responsible Investors”) (3.92) (0.4%) (0.4%) (6.00) (0.5%) (0.5%) (4.36) (0.4%) (0.4%) - Europe 484.10 53.1% 53.4% 486.61 41.1% 41.2% 523.08 43.7% 43.8% - Outside Europe 233.65 25.7% 25.8% 293.56 24.8% 24.9% 326.29 27.2% 27.3% Other and unidentifi ed 13.00 1.4% 1.4% 66.27 5.6% 5.6% 7.42 0.6% 0.6% TOTAL 911.77 100% 100% 1,184.15 100% 100% 1,198.15 100% 100% (*) Société Fédérale de Participations et d’Investissement: public-interest société anonyme (public limited company) acting on behalf of the Belgian government. (**) Excluding trading desks’ working positions.
➤ BNP PARIBAS OWNERSHIP STRUCTURE Société Fédérale de Participations et d’Investissement (SFPI) became a AS AT 31 DECEMBER 2010 (VOTING RIGHTS) shareholder in BNP Paribas at the time of the integration with the Fortis group in 2009. During 2009, SFPI made two threshold crossing disclosures to the Autorité des marchés fi nanciers (AMF):
43.8% 27.3% ■ On 19 May 2009 (AMF disclosure no. 209C0702), SFPI disclosed that European inst. Non-European its interest in BNP Paribas’ capital and voting rights had risen above investors inst. investors the 5% and 10% disclosure thresholds following its transfer of a 74.94% stake in Fortis Bank SA/NV in return for 121,218,054 BNP Paribas shares, which at the time represented 9.83% of its share capital and 11.59% of its voting rights. The disclosure stated that neither 5.5% Retail shareholders the Belgian government nor SFPI were considering taking control of 0.6% BNP Paribas. 5.8% Other and unidentified At the same time, BNP Paribas notifi ed the AMF (AMF disclosure Employees no. 209C0724) that an agreement had been reached between the o/w corporate mutual funds 4.2% 10.7% o/w direct ownership 1.6% SFPI Belgian government, SFPI and Fortis SA/NV (renamed Ageas SA/NV 1.1% 5.2% on 29 April 2010), giving Fortis SA/NV an option to buy the 121,218,054 Gd Duchy of AXA BNP Paribas shares issued as consideration for SFPI’s transfer of its Luxembourg shares in Fortis Bank, with BNP Paribas having a right of subrogation regarding the shares concerned. To the Company’s knowledge, no shareholder other than SFPI or AXA owns more than 5% of its capital or voting rights.
2010 Registration document and fi nancial report - BNP PARIBAS 17 PRESENTATION OF THE BNP PARIBAS GROUP 1 BNP Paribas and its shareholders
■ On 4 December 2009 (AMF disclosure no. 209C1459), SFPI disclosed On 16 December 2005, the AXA Group and the BNP Paribas Group that it owned 10.8% of BNP Paribas’ capital and voting rights. This informed the AMF (AMF disclosure no. 205C2221) about an agreement 1 change mainly resulted from: under which the two groups would maintain stable cross-shareholdings ■ BNP Paribas’ issue of ordinary shares between 30 September and and reciprocal call options exercisable in the event of a change in control 13 October 2009, affecting either group. The two companies subsequently notifi ed the AMF on 5 August 2010 (AMF disclosure no. 210C0773) that they had ■ and the reduction in its capital through the cancellation, on 26 entered into an agreement replacing that of December 2005 to take November, of non-voting shares issued on 31 March 2009 to Société into account the new rules on fi nancial institutions drawn up by the de Prise de Participation de l’État. regulators. The new agreement no longer refers to maintaining stable BNP Paribas received no disclosures from SFPI in 2010. cross-shareholdings.
LISTING INFORMATION
When the shareholders of BNP and Paribas approved the merger between correspond to 1 BNP Paribas share). The ADRs have been traded on the the two banks at the Extraordinary General Meeting of 23 May 2000, OTCQX International Premier since 14 July 2010 in order to provide better BNP shares became BNP Paribas shares. The Euroclear-France code liquidity and clarity for US investors. for BNP Paribas is the same as the previous BNP code (13110). Since To help increase the number of shares held by individual investors, 30 June 2003, BNP Paribas shares have been registered under ISIN code BNP Paribas carried out a two-for-one share split on 20 February 2002, FR0000131104. reducing the par value of the shares to EUR 2. BNP shares were fi rst listed on the Cash Settlement Market of the Paris BNP became a constituent of the CAC 40 index on 17 November 1993 and Stock Exchange on 18 October 1993, following privatisation, before of the EuroStoxx 50 index on 1 November 1999. Since 18 September 2000, being transferred to the Monthly Settlement Market on 25 October of it has been a constituent of the Dow Jones Stoxx 50 index. In 2007, that year. When the monthly settlement system was discontinued on BNP Paribas joined the Global Titans 50, an index comprising the 50 25 September 2000, BNP Paribas shares became eligible for Euronext’s largest corporations worldwide. BNP Paribas shares are also included in Deferred Settlement Service (SRD). The shares are also traded on SEAQ the main benchmark indexes for sustainable development: Aspi Eurozone, International in London and on the Frankfurt Stock Exchange. Since FTSE4Good (Global and Europe 50), DJSI World and Ethibel. All of these 24 July 2006 they have been traded on the MTA International exchange listings have fostered liquidity and share price appreciation, as the in Milan. Since privatisation, a Level 1 144A ADR programme has been BNP Paribas share is necessarily a component of every portfolio and active in the USA, where JP Morgan Chase is the depositary bank (2 ADRs fund that tracks the performance of these indexes.
➤ SHARE PERFORMANCE BETWEEN 31 DECEMBER 2007 AND 31 DECEMBER 2010
Comparison with the DJ Euro Stoxx Banks, DJ Stoxx Banks and CAC 40 indexes (rebased on share price)
Euros 80
70
60
50 France CAC40 BNP Paribas
40
DJ Stoxx Banks 30 DJ Euro Stoxx Banks
20
10 31/12/07 28/02/08 30/04/08 30/06/08 31/08/08 31/10/08 31/12/08 28/02/09 30/04/09 30/06/09 31/08/09 31/10/09 31/12/09 28/02/10 30/04/10 30/06/10 31/08/10 31/10/10 31/12/10
Source: Datastream.
18 2010 Registration document and fi nancial report - BNP PARIBAS PRESENTATION OF THE BNP PARIBAS GROUP BNP Paribas and its shareholders 1
➤ AVERAGE MONTHLY SHARE PRICES AND MONTHLY HIGHS AND LOWS SINCE JANUARY 2009(*)
70 High Low Average 1 55.67 60 56.99 55.26 53.86 53.50 53.96 55.92 55.30 52.89 49.06 54.23 52.63 51.86 50.78 48.09 49.64 45.86 47.12 46.26 50 43.94
40 35.85 28.77 28.00 30 25.41
20
10
0 34.02 20.78 28.59 22.40 33.53 21.12 39.32 31.98 47.38 39.12 48.43 42.67 49.84 44.04 57.34 50.14 56.27 50.63 56.25 50.77 58.15 50.87 56.56 54.26 59.60 51.07 53.95 47.11 58.82 54.30 57.99 50.73 53.11 43.93 50.32 41.48 54.96 43.45 56.96 49.12 56.13 52.17 54.00 51.02 54.81 45.60 52.07 46.55 july 09 july 10 jan. 09 jan. 10 feb. 10 feb. 09 oct. 10 oct. 09 apr. 09 apr. apr. 10 apr. nov. 10 nov. nov. 09 nov. dec. 10 aug. 09 aug. 10 may 09 may 10 june 10 june 09 sept. 10 sept. 09 march 09 march 10 dec. 09
(*) Share prices have been adjusted to account for the capital increases with maintained preferential subscription rights, carried out from 30 September 2009 to 13 October 2009.
■ Between 31 December 2007 and 31 December 2010, the share price debt in some euro zone countries, and their share price retreated fell by 33.99% against a 32.23% decline for the CAC 40, but a 60.50% substantially in the Spring, reaching lows in June. The increase from fall for the DJ Euro Stoxx Banks index (index of banking stocks in the September 2010 onwards only partially offset the fi rst half decline. eurozone) and a 53.73% drop for the DJ Stoxx Banks index (index In addition, the Basel Committee’s publication of proposals to of banking stocks in Europe). BNP Paribas shares suffered from the signifi cantly strengthen capital and liquidity requirements for banks widespread loss of confi dence in fi nancial institutions, triggered by the weighed heavily on investor perception of banks and, consequently, subprime mortgage crisis in the US. However, because BNP Paribas their share price. had much lower exposure to the crisis than many of its competitors, ■ At 31 December 2010, BNP Paribas’ market capitalisation was EUR its share price performance compared very well with banking-sector 57 billion, ranking it fi fth among CAC 40 stocks (unchanged from end indexes until October 2008. The market dislocation that followed the 2009). In terms of free fl oat, BNP Paribas ranks third among the CAC 40 Lehman Brothers bankruptcy in mid-September 2008 affected the stocks (also unchanged since 2009). BNP Paribas had the eighth- Group’s activities and consequently its share price. As a result, much largest free fl oat in the DJ Euro Stoxx 50 index at end-2010, down of its previous outperformance relative to broad bank indexes had from sixth place a year before. disappeared by the end of 2008. ■ Daily trading volume on Euronext Paris averaged 5,140,273 shares in However, the tide has turned since early 2009, and the share 2010, down 4.36% from 5,374,599 a year earlier. Rather than a decrease price rose from EUR 29.40 at 31 December 2008 to EUR 47.61 at in liquidity, this refl ects the impact of MiFID (Markets in Financial 31 December 2010. This 61.94% increase comfortably beat the 18.24% Instruments Directive) which, from 1 November 2007, abolished the rise in the CAC 40 index, the 8.93% rise in the DJ Euro Stoxx Banks index concentration rule requiring orders to be routed through regulated and the 29.91% rise in the DJ Stoxx Banks index over the same period. markets. The abolition led to deregulation of trading venues and During 2010, the share price shed 14.83%, underperforming the CAC 40 growth in alternative securities trading methods, such as multilateral (down 3.34%) and similar to the DJ Stoxx Banks (down 11.57%), but trading facilities (MTFs) and systematic internalisers. signifi cantly outperforming the DJ EuroStoxx Banks (down 26.86%). Including volumes traded on MTFs, daily trading volume averaged The banks in this index were affected by investor fears over sovereign 7,258,788 shares in 2010 (source: TAG Audit).
2010 Registration document and fi nancial report - BNP PARIBAS 19 PRESENTATION OF THE BNP PARIBAS GROUP 1 BNP Paribas and its shareholders
➤ TRADING VOLUME ON EURONEXT PARIS IN 2010 (DAILY AVERAGE)
1 503.8 EUR million thousands of shares
316.5
305.7 255.0 259.0 246.0 232.7 204.9
210.4 215.2 207.6 205.8 5,647 3,900 3,917 4,799 4,140
10,434 4,309
3,792 6,867 5,229 3,816
5,041
January February March April May June July August September October November December Source: Euronext Paris
➤ TRADING VOLUME IN 2010 (DAILY AVERAGE)
681.5
EUR million thousands of shares
437.2 419.3 375.2 359.0 358.5 335.0 313.6
293.2 301.8 291.4 299.7 7,742 5,480 5,968 7,314 6,062
14,121 6,200
5,316 9,497 7,237 5,318
7,100
January February March April May June July August September October November December Source: TAG Audit
20 2010 Registration document and fi nancial report - BNP PARIBAS PRESENTATION OF THE BNP PARIBAS GROUP BNP Paribas and its shareholders 1
KEY SHAREHOLDER DATA 1 In euros 2006 2007 2008 2009 2010 Earnings per share (1) (*) 7.81 8.25 2.99 5.20 6.33 Net assets per share (2) (*) 48.40 50.93 45.68 51.93 55.62 Net dividend per share (*) 3.01 3.26 0.97 1.50 2.10 (3) Payout rate (%) (4) 40.3 39.8 33.0 32.3 33.4 (3) Share price High (5) (*) 86.01 92.40 73.29 58.58 60.38 Low (5) (*) 64.78 65.64 27.70 20.08 40.81 year-end (*) 80.33 72.13 29.40 55.90 47.61 CAC 40 index on 31 December 5,541.76 5,614.08 3,217.97 3,936.33 3,804.78 (1) Based on the average number of shares outstanding during the year. (2) Before dividends. Net reevaluated book value based on the number of shares outstanding at year-end. (3) Subject to approval at the Annual General Meeting of 11 May 2011. (4) Dividend recommended at the Annual General Meeting expressed as a percentage of earnings per share. (5) Registered during trading. (*) Data in the above table have been adjusted to refl ect share issues with preferential subscription rights: - March 2006 (adjustment ratio = 0.992235740050131); - From 30 September to 13 October 2009 (adjustment ratio = 0.971895).
CREATING VALUE FOR SHAREHOLDERS
TOTAL SHAREHOLDER RETURN (TSR) ■ exercise of pre-emptive rights during the rights issues in March 2006 and October 2009; Calculation parameters ■ returns stated gross, i.e. before any tax payments or brokerage fees.
■ dividends reinvested in BNP shares then BNP Paribas shares; 50% tax credit included until tax credit system abolished in early 2005;
2010 Registration document and fi nancial report - BNP PARIBAS 21 PRESENTATION OF THE BNP PARIBAS GROUP 1 BNP Paribas and its shareholders
Calculation results The following table indicates, for various periods ending on 31 December 2010, the total return on a BNP share, then a BNP Paribas share, as well as 1 the effective annual rate of return. Share price Number of shares Investment at the investment date at end of calculation Initial investment Effective annual Holding period date (in euros) period (31/12/2010) multiplied by rate of return Since privatisation 18/10/1993 36.59 3.86 x 5.03 + 9.84% 17 years 03/01/1994 43.31 3.52 x 3.87 + 8.28% 16 years 03/01/1995 37.20 3.46 x 4.42 + 9.74% 15 years 02/01/1996 33.57 3.38 x 4.80 + 11.02% 14 years 02/01/1997 30.40 3.28 x 5.14 + 12.41% 13 years 02/01/1998 48.86 3.18 x 3.10 + 9.09% 12 years 04/01/1999 73.05 3.12 x 2.03 + 6.09% Since inception of BNP Paribas 01/09/1999 72.70 3.03 x 1.99 + 6.24% 11 years 03/01/2000 92.00 3.03 x 1.57 + 4.18% 10 years 02/01/2001 94.50 2.95 x 1.49 + 4.04% 9 years 02/01/2002 100.40 2.85 x 1.35 + 3.42% 8 years 02/01/2003 39.41 1.38 x 1.67 + 6.61% 7 years 02/01/2004 49.70 1.33 x 1.27 + 3.50% 6 years 03/01/2005 53.40 1.27 x 1.14 + 2.14% 5 years 02/01/2006 68.45 1.23 x 0.85 - 3.10% 4 years 02/01/2007 83.50 1.18 x 0.67 - 9.50% 3 years 02/01/2008 74.06 1.14 x 0.73 - 9.92% 2 years 02/01/2009 30.50 1.08 x 1.69 + 30.07% 1 year 02/01/2010 56.11 1.03 x 0.87 - 12.66%
BNP Paribas uses two comparative methods to measure the value Dividends reinvested. created for shareholders, based on a long/medium-term investment Preferential subscription rights exercised in the March 2006 and period reflecting the length of time during which the majority of October 2009 rights issues. individual investors hold their BNP Paribas shares. Value at 31 December 2010: 1.2284 shares at EUR 47.61, i.e. EUR 58.48. Effective rate of return: -3.10% per year FIVE-YEAR COMPARISON OF AN INVESTMENT IN BNP PARIBAS SHARES Investment of Eur 68.45 on 1 January 2006 AT AN OPENING PRICE OF EUR 68.45 in a Caisse d’Epargne “Livret A” passbook account: ON 2 JANUARY 2006 WITH THE CAISSE The interest rate on the investment date was 2%, increased to 2.25% on D’EPARGNE “LIVRET A” PASSBOOK 1 February and then to 2.75% on 1 August 2006. The rate was increased SAVINGS ACCOUNT AND MEDIUM-TERM to 3% on 1 August 2007. The interest rate was increased twice more in GOVERNMENT BONDS. 2008, to 3.50% on 1 February and to 4% on 1 August. In 2009, the rate was gradually reduced to 2.50% on 1 February, 1.75% on 1 May and In this calculation, we assess the creation of shareholder value by 1.25% on 1 August. It then moved back to 1.75% on 1 August 2010. At comparing an investment in BNP Paribas shares with two “risk-free” 31 December 2010, this investment was worth EUR 77.31, an increase investments: the Caisse d’Epargne “Livret A” passbook savings account of EUR 8.86 Euros (+12.9%). and medium-term French government notes (OATs).
Total shareholder return on an investment in BNP Paribas shares Initial investment = 1 share at the opening price on 2 January 2006 = EUR 68.45.
22 2010 Registration document and fi nancial report - BNP PARIBAS PRESENTATION OF THE BNP PARIBAS GROUP BNP Paribas and its shareholders 1
Investment of Eur 68.45 on 1 January 2006 ■ 4.13131% (BTAN) in January 2008 for 3 years; in fi ve-year french government bonds : ■ 2.069% (BTAN) in January 2009 for 2 years; The fi ve-year BTAN yield on 1 January 2006 was 3.06117%. At the end ■ 1.248% in January 2010 for 1 year (Euribor). 1 of each subsequent year, interest income is reinvested in a similar note At the end of fi ve years, the accrued value of the investment is EUR 79.65, on the following terms: an increase of EUR 11.20 (+16.4%). ■ 3.90021% (BTAN) in January 2007 for 4 years;
➤ VALUE AT 31/12/2010 OF A EUR 68.45 INVESTMENT ➤ COMPARATIVE TOTAL 5-YEAR RETURN MADE ON 01/01/2006 FOR AN INVESTMENT OF EUR 68.45
(EUR) (EUR) 11.20 77.31 79.65 8.86
58.48
-9.97
Livret A Government bonds BNP Paribas shares Livret A Government bonds BNP Paribas shares
COMMUNICATION WITH SHAREHOLDERS
BNP Paribas endeavours to provide all shareholders with clear, consistent, fi nancial newsletter informs both members of the “Cercle BNP Paribas” high-quality information at regular intervals, in accordance with best and other shareholders of important events concerning the Group, and a market practice and the recommendations of stock market authorities. summary of the matters discussed during the Annual General Meeting is sent out very early in July. During the year, senior management presents The Investor Relations team informs French and foreign institutional the Group’s strategy to individual shareholders at meetings organised investors and fi nancial analysts of the Group’s strategies, major events in various French cities and towns. For example, in 2010, meetings were concerning the Group’s business and, of course, the Group’s quarterly held in Rouen on 27 May, Massy on 22 June, Orléans on 29 June and Pau results. In 2011 the following dates have been set (1): on 28 September. BNP Paribas representatives also met and spoke with ■ 17 February 2011: publication of 2010 results; over 1,000 people at the ACTIONARIA shareholder fair held in Paris on ■ 4 May 2011: results for the fi rst quarter of 2011; 19 and 20 November 2010. ■ 2 August 2011: publication of 2011 half-year results; ■ 9 November 2011: results for the third quarter and fi rst nine months BNP Paribas Shareholders’ Guide of 2011. The BNP Paribas Shareholders’ Guide was designed to provide Informative briefi ngs are organised several times a year, when the annual individual shareholders with full details on share price and half-year results are released, or on specifi c topics, providing senior performance and the Bank’s achievements. Its main purpose management with an opportunity to present the BNP Paribas Group and is to give investors a better idea and a deeper understanding its strategy. A Relations Offi cer is responsible for liaising with managers of the economic environment and of the markets in which of ethical and socially responsible funds. BNP Paribas operates. The guide can be obtained on request from The Individual Shareholder Relations Department provides information the Individual Shareholder Relations Department and can also be and deals with queries from the Group’s 585,000 or so individual viewed and downloaded on the website (see below). shareholders (source: 31 December 2010 TPI Survey). A half-yearly
(1) Subject to alteration.
2010 Registration document and fi nancial report - BNP PARIBAS 23 PRESENTATION OF THE BNP PARIBAS GROUP 1 BNP Paribas and its shareholders
In 1995, the “Cercle BNP Paribas” was set up for individual shareholders developments and events. All fi nancial documents such as Annual Reports holding at least 200 shares. The Cercle currently has 63,200 shareholder and Registration Documents can also be viewed and downloaded. The members. Every year, alternating with three fi nancial newsletters, three fi nancial calendar gives the dates of important forthcoming events, 1 issues of “La Vie du Cercle” are sent to shareholders. This is a publication such as the Annual General Meeting, communications of results and inviting them to take part in artistic and cultural events with which shareholder seminars. Publications compiled by the Bank’s Economic BNP Paribas is associated, as well as training sessions. These include Research unit can be viewed on the website. The website also naturally seminars on trading in equities (technical analysis, fi nancial research, features the latest share performance data and comparisons with major placing orders etc.), private asset management and warrants. Economic indexes. Among its features is a tool for calculating returns. update sessions are also organised by BNP Paribas teams. The Bank The Investors and Shareholders section now includes all reports and regularly organises scientifi c conferences and visits to industrial sites. presentations concerning the Bank’s business and strategy aimed at These events are held in Paris and the provinces, on weekdays and the all audiences (individual shareholders, institutional investors, asset weekend, to enable as many people as possible to attend. To illustrate managers and financial analysts). The website also has a section the variety on offer, 286 events were organised for more than 13,000 entitled “To be a shareholder”, which was specifi cally designed with participants in 2010. Shareholders can obtain information about these individual shareholders in mind, offering information tailored to their services by dialling a special toll-free number: 0800 666 777. A telephone needs and details of proposed events. In addition, there is a specifi c news service can also be accessed through the same number, offering a section dedicated to the Annual General Meeting of Shareholders, which wide range of information to BNP Paribas shareholders, such as the share includes information regarding the attending of the meeting, ways of price, shareholders’ events, news and interviews. There is also a Cercle voting, practical matters, as well as a presentation of the resolutions and des Actionnaires website (cercle-actionnaires.bnpparibas.com), which the complete text of all speeches made by corporate offi cers. Webcasts features all offers and services available among others things through of the Annual General Meeting can be viewed on the Bank’s website. In the Cercle membership card. response to the expectations of individual shareholders and investors, The BNP Paribas website (http://invest.bnpparibas.com) can be consulted and to meet increasingly strict transparency and regulatory disclosure in both French and English. Large portions of the website are also requirements, BNP Paribas regularly adds sections to its website and available in Italian, with Dutch soon to come. It provides information on improves existing sections with enhanced content (particularly as regards the Group, including press releases, key fi gures and details of signifi cant the glossary) and new functions.
SHAREHOLDER LIAISON COMMITTEE
After its formation in 2000, BNP Paribas decided to create a Shareholder ■ Jean-Marie Laurent, resident of the Oise departement; Liaison Committee to help the Group improve communications with its ■ Dyna Peter-Ott, residing in Strasbourg; individual shareholders. At the Shareholders’ Meeting that approved the ■ Jean-Luc Robaux, residing in Nancy; BNP Paribas merger, the Chairman of BNP Paribas initiated the process of appointing members to this committee, which was fully established ■ Chantal Thiebaut, resident of the Meurthe-et-Moselle departement; in late 2000. ■ Thierry de Vignet, resident of the Dordogne departement; Headed by Michel Pébereau, the committee includes ten shareholders ■ Odile Uzan-Fernandes, BNP Paribas employee; who are both geographically and socio-economically representative of the ■ Bernard Coupez, Honorary Chairman of the Organisation of shareholder individual shareholder population, along with two employees or former employees, pensioners, fromer employees of the BNP Paribas group. employees. Each member serves a three-year term. When their terms In accordance with the committee’s Charter – i.e. the Internal Rules expire, announcements are published in the press and/or in the Group’s that all committee members have adopted – the Committee met twice various fi nancial publications, inviting new candidates to come forward. in 2010, on 19 March and 24 September, in addition to taking part in the Any shareholder can become a candidate. Annual General Meeting and attending the ACTIONARIA shareholder fair. At 1 January 2011, the members of the Liaison Committee were as follows: The main topics of discussion included:
■ Michel Pébereau, Chairman; ■ BNP Paribas’ ownership structure and changes therein, particularly ■ Franck Deleau, resident of the Lot department; among individual shareholders; ■ ■ Nicolas Derely, resident of the Paris area; the periodical publications which provide information on the Group’s achievements and strategy; ■ Jean-Louis Dervin, residing in Caen; ■ the integration with the Fortis group; ■ Jacques de Juvigny, resident of the Alsace region; ■ the draft 2009 Registration Document and Annual Report; ■ André Laplanche, residing in Cavaillon;
24 2010 Registration document and fi nancial report - BNP PARIBAS PRESENTATION OF THE BNP PARIBAS GROUP BNP Paribas and its shareholders 1
■ quarterly results presentations; ■ the Bank’s participation in the ACTIONARIA shareholder fair. At this ■ initiatives taken in preparation for the Annual General Meeting; event, several Liaison Committee members explained the role played by the committee to people who visited the Group’s stand. ■ revision of the Shareholders’ Guide and the best way of keeping it 1 regularly up to date;
DIVIDEND
At the 11 May 2011 Annual General Meeting, the Board of Directors The total amount of the proposed payout is EUR 2,517 million, compared will recommend a dividend of EUR 2.10 per share, an increase of 40% with EUR 1,778 million in 2010, representing an increase of 41.6%. The relative to 2010. The shares will go ex-dividend on 20 May and the proposed payout rate is 33.4%(1). dividend will be paid on 25 May 2011, subject to approval at the Annual General Meeting.
DIVIDEND EVOLUTION (EURO PER SHARE)
3.26 3.01
2.53
2.10 (*) 1.93
1.50 1.40
1.09 1.16 1.16 0.97 0.85 0.72
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
(*)(*) SousSubject réserve to approval de l'approbation at the Annual de l'Assemblée General Meeting Générale of du11 11May mai 2011. 2011.
Dividends for 1998-2008 have been adjusted to reflect: ■ the two-for-one share split carried out on 20 February 2002; ■ capital increases with preferential subscription rights maintained in March 2006 and between 30 September and 13 October 2009.
The Group’s objective is to adjust the dividend to refl ect variations in Timeframe for claiming dividends: after five years, any unclaimed income and to optimise management of available capital. dividends will be forfeited and paid to the French Treasury, in accordance with applicable legislation.
(1) Dividend recommended at the 11 May 2011 Annual General Meeting expressed as a percentage of net earnings.
2010 Registration document and fi nancial report - BNP PARIBAS 25 PRESENTATION OF THE BNP PARIBAS GROUP 1 BNP Paribas and its shareholders
BNP PARIBAS REGISTERED SHARES
1 At 31 December 2010, 37,287 shareholders held BNP Paribas registered ■ and, of course, pay no custody fees. shares. Holding shares in pure registered form is not compatible with holding them in a PEA tax-efficient share saving plan, due to the specific regulations and procedures applying to those plans. REGISTERED SHARES HELD DIRECTLY WITH BNP PARIBAS Shareholders who hold shares in pure registered form: REGISTERED SHARES HELD IN AN ADMINISTERED ACCOUNT ■ automatically receive all documents regarding the Bank which are sent to shareholders; BNP Paribas is also extending its administered share account services to institutional shareholders. For institutional shareholders, this type of ■ can call a French toll-free number (0800 600 700) to place buy and account combines the main benefi ts of holding shares in bearer form sell orders (1) and to obtain any information; with those of holding pure registered shares: ■ benefi t from special, discounted brokerage fees; ■ shares can be sold at any time, through the shareholder’s usual broker; ■ have access to “PlanetShares” (https://planetshares.bnpparibas.com), a fully secure dedicated web server, allowing them to view registered ■ the shareholder can have a single share account, backed by a cash share accounts, and account movements, to as well as place and account; track orders (1) ; ■ the shareholder is automatically invited to attend and vote at General ■ are automatically invited to General Meetings without the need for Meetings, without the invitation being sent through a third party; an ownership certifi cate; ■ shareholders may receive notice of meetings and vote at General ■ may receive notice of meetings by Internet; Meetings online.
ANNUAL GENERAL MEETING
The last General Meeting of Shareholders took place on 12 May 2010. cast on resolutions were posted online the day after the meeting. The The text of the resolutions and the video of the meeting can be viewed meeting was also written up in the specialist press and a specifi c letter on the BNP Paribas website, which is where the original live webcast was sent to shareholders summarising the meeting. was shown. The composition of the quorum and the results of the votes
The quorum broke down as follows:
➤ BREAKDOWN OF QUORUM
Number Number of shareholders (%) of shares (%) Present 1,885 14.44% 238,765,588 32.68% Proxy given to spouse or another shareholder 72 0.55% 71,449 0.01% Proxy given to Chairman 7,044 53.95% 35,313,727 4.83% Postal votes 4,056 31.06% 456,462,231 62.48% TOTAL 13,057 100% 730,612,995 100% Of which online 636 4.87% 911,472 0.12%
Quorum Total number of shares issued excluding treasury stock 1,183,694,315 61.72%
(1) Subject to their having previously signed a “brokerage service agreement” (free of charge).
26 2010 Registration document and fi nancial report - BNP PARIBAS PRESENTATION OF THE BNP PARIBAS GROUP BNP Paribas and its shareholders 1
All resolutions proposed to the shareholders were approved. Results Rate of approval (%) ORDINARY MEETING 1 Resolution 1: Approval of the consolidated balance sheet at 31 December 2009 and the consolidated profi t and loss account for the year then ended 99.82% Resolution 2: Approval of the parent-company balance sheet at 31 December 2009 and the parent-company profi t and loss account for the year then ended 99.82% Resolution 3: Appropriation of net income and dividend distribution 99.59% Resolution 4: Agreements and commitments governed by Article L.225-38 et seq. of the Code de Commerce 95.21% Resolution 5: Share buybacks 99.63% Resolution 6: Renewal of the term of offi ce of Louis Schweitzer as a Director 77.03% Resolution 7: Appointment of Michel Tilman as a Director 98.23% Resolution 8: Appointment of Emiel Van Broekhoven as a Director 98.11% Resolution 9: Appointment of Meglena Kuneva as a Director 98.76% Resolution 10: Appointment of Jean-Laurent Bonnafé as a Director 99.19% Resolution 11: Setting the amount of Directors’ fees 97.79% EXTRAORDINARY MEETING Resolution 12: Issue, with pre-emptive rights, of ordinary shares and securities giving rights to the share capital or to debt securities 93.12% Resolution 13: Issue, without pre-emptive rights, of ordinary shares and securities giving rights to the share capital or to debt securities 85.98% Resolution 14: Issue of securities to be given in exchange for securities tendered to public exchange offers 87.34% Resolution 15: Issue of securities to be given in exchange for unlisted securities tendered, up to a maximum of 10% of the capital 92.83% Resolution 16: Blanket limit on authorisations to issue shares without pre-emptive rights for existing shareholders 88.25% Resolution 17: Issue of shares to be paid up by capitalising income, retained earnings or additional paid-in capital 98.81% Resolution 18: Blanket limit on authorisations to issue shares with or without pre-emptive rights 91.35% Resolution 19: Transactions reserved for members of the Employee Savings Plan 97.10% Resolution 20: Reduction in the Bank’s capital by cancelling shares 99.80% Resolution 21: Merger of Fortis Banque France into BNP Paribas 99.70% Resolution 22: Amendment to the Articles of Association following the buyback of preferred shares 99.27% Resolution 23: Powers to carry out formalities 99.90%
The 2010 Annual General Meeting was an additional opportunity for including EUR 6,360 through internet voting) are donated in addition BNP Paribas to demonstrate its commitment to sustainable development, to the funds that the Bank already grants to this programme via the and to social and environmental responsibility. BNP Paribas seeks to BNP Paribas Foundation, which operates under the aegis of the Fondation create value consistently, to show its quality and its respect not only for de France. Total 2010 contributions were ultimately divided between 70 “traditional” partners comprising shareholders, clients and employees, projects (62 in 2009), all of which were initiated by BNP Paribas staff. In but also for the environment and community at large. The Group all, 98 projects were submitted and 88 of them were examined. The sums considered it appropriate that these principles and values be refl ected in awarded varied from EUR 1,000 to EUR 4,000 according to the scale of the its General Meetings. As a result, a decision was taken, in conjunction with project, its nature and the commitment of employees. The projects relate the Shareholder Liaison Committee, to donate EUR 10 for every investor mainly to education, international co-operation, healthcare, disabilities, attending the meeting or voting online, to the “Coups de pouce aux projets and help for disadvantaged and socially excluded people. du personnel” (a helping hand for employee projects) programme. The The allocation of funds is contained in the notice convening the next programme was specifi cally developed by the BNP Paribas Foundation General Meeting. to encourage public-interest initiatives for which Bank staff personally volunteer their time and efforts. The sums collected (EUR 25,210 in 2010,
2010 Registration document and fi nancial report - BNP PARIBAS 27 PRESENTATION OF THE BNP PARIBAS GROUP 1 BNP Paribas and its shareholders
The procedures for BNP Paribas’ General Meetings are defined in In total, nearly 115,000 of the Bank’s shareholders (representing about Article 18 of the Bank’s Articles of Association. 20% of the total 590,000 at the time of the General Meeting) personally received the information needed to participate in 2010. 1 The Board of Directors calls an Ordinary General Meeting at least once a year to vote on the agenda set by the Board. Staff at all BNP Paribas branches is specifi cally trained to provide the necessary assistance and carry out the required formalities. The Board may call Extraordinary General Meetings for the purpose of amending the Articles of Association, and especially to increase the Bank’s share capital. Resolutions are adopted by a two-thirds majority ATTENDANCE AT MEETINGS of shareholders present or represented. Any holder of shares may gain admittance to a General Meeting, provided The combined Ordinary and Extraordinary General Meeting may be called that shares have been recorded in their accounts for at least three trading in a single notice of meeting and held on the same date. BNP Paribas days. Holders of bearer shares must in addition present an entry card or will hold its next combined Ordinary and Extraordinary General Meeting certifi cate stating the ownership of the shares. on 11 May 2011 (1).
VOTING NOTICE OF MEETINGS Shareholders who are unable to attend a General Meeting may complete For combined Ordinary and Extraordinary General Meetings: and return to BNP Paribas the postal voting form/proxy enclosed with the ■ holders of registered shares are notified by post; the convening convening notice. This document enables them to either: notice contains the agenda, the draft resolutions and a postal voting ■ vote by post; form. Notice of meeting was sent via the Internet for the fi rst time ■ in 2010, once the Group had obtained the agreement of certain of its give their proxy to their spouse or any other individual or legal entity; shareholders, as required by law: 7% of them took up this new option; ■ give their proxy to the Chairman of the Meeting or indicate no proxy. ■ holders of bearer shares are notified via announcements in the Shareholders or their proxies present at the meeting are given the press, particularly investor and fi nancial journals. In addition to legal necessary equipment to cast their votes. Since the General Meeting of requirements, BNP Paribas sends the following documents aimed at 13 May 1998, BNP Paribas has used an electronic voting system. boosting attendance:
■ convening notices and a postal voting form for shareholders who Since the Meeting of 28 May 2004, shareholders can use own over a certain number of shares (set at 250 shares in 2010); a dedicated, secure internet server to send all the requisite these same documents may be accessed freely on the website, attendance documents prior to Annual General Meeting
■ letters informing shareholders about the General Meeting and (https:// gisproxy.bnpparibas.com/bnpparibas.pg). arrangements for taking part.
DISCLOSURE THRESHOLDS
In addition to the legal thresholds, and in accordance with Article 5 of The disclosures described in the previous two paragraphs shall also apply the Articles of Association, any shareholder, whether acting alone or in when the shareholding falls below the above-mentioned thresholds. concert, who comes to hold directly or indirectly at least 0.5% of the In the case of failure to comply with these disclosure requirements, the capital or voting rights of BNP Paribas, or any multiple of that percentage undisclosed shares will be stripped of voting rights at the request of one up to 5%, is required to notify BNP Paribas by registered letter with or more shareholders who hold a combined interest of at least 2% of the return receipt. capital or voting rights of BNP Paribas. Once the 5% threshold is reached, shareholders are required to disclose any increase in their interest representing a multiple of 1% of the capital or voting rights of BNP Paribas.
(1) Subject to alteration.
28 2010 Registration document and fi nancial report - BNP PARIBAS 2 CORPORATE GOVERNANCE
2.1 Board of Directors 30 Membership of the Board of Directors 30 Other Corporate Offi cers 40 Compensation 40 Summary of reported transactions on BNP Paribas stock 41
2.2 Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board and on the internal control procedures implemented by the company 42 Corporate governance at BNP Paribas 42 Internal control 59 Internal control procedures relating to the preparation and processing of accounting and fi nancial information 64
2.3 Statutory Auditors’ report, prepared in accordance with Article L.225-235 of the French Commercial Code on the report prepared by the Chairman of the Board of Directors 68
2.4 Executive Committee 70
2010 Registration document and fi nancial report - BNP PARIBAS 29 CORPORATE GOVERNANCE 2 Board of Directors
2.1 Board of Directors
MEMBERSHIP OF THE BOARD OF DIRECTORS
Michel PEBEREAU Principal function (1) : Chairman of the BNP Paribas Board of Directors 2 Date of birth 23 January 1942 Functions at 31 December 2010 (1) Elected on 13 May 2009. Director of: AXA, Compagnie de Saint-Gobain, Lafarge, Total, Term expires at the 2012 AGM BNP Paribas (Suisse) SA, Eads N.V. (Netherlands), Pargesa Holding SA First elected to the Board on: 14 May 1993 (Switzerland) Member of the Supervisory Board of: Banque Marocaine Number of BNP Paribas shares held (2): 214,260 pour le Commerce et l’Industrie (Morocco) Offi ce address: 3, rue d’Antin Non-voting Director of: Société Anonyme des Galeries Lafayette 75002 PARIS, Chairman of: European Financial Round Table, Investment Banking FRANCE and Financial Markets Committee of the Fédération Bancaire Française, Management Board of Institut d’Etudes Politiques de Paris, Institut de l’entreprise Member of: Académie des Sciences morales et politiques, Executive Committee of Mouvement des Entreprises de France, Haut Conseil de l’Éducation, Institut International d’Études Bancaires, International Advisory Panel of the Monetary Authority of Singapore, International Capital Markets Advisory Committee of the Federal Reserve Bank of New York, International Business Leaders’ Advisory Council for the Mayor of Shanghai (IBLAC)
Functions at previous year-ends (the companies listed are the parent companies of the groups in which the functions were carried out) 2009: 2008: 2007: 2006: Chairman of the Board Chairman of the Board Chairman of the Board Chairman of the Board of Directors of: BNP Paribas of Directors of: BNP Paribas of Directors of: BNP Paribas of Directors of: BNP Paribas Director of: Lafarge, Compagnie Director of: Lafarge, Compagnie Director of: Lafarge, Compagnie Director of: Lafarge, Compagnie de de Saint-Gobain, Total, BNP Paribas de Saint-Gobain, Total, BNP Paribas de Saint-Gobain, Total, Eads N.V. Saint-Gobain, Total, Pargesa Holding (Suisse) SA, Eads N.V. (Netherlands), (Suisse) SA, Eads N.V. (Netherlands), (Netherlands), Pargesa Holding SA SA (Switzerland) Pargesa Holding SA (Switzerland) Pargesa Holding SA (Switzerland) (Switzerland) Member of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board of: AXA, Banque Marocaine pour le of: AXA, Banque Marocaine pour le of: AXA, Banque Marocaine pour le of: AXA, Banque Marocaine pour le Commerce et l’Industrie (Morocco) Commerce et l’Industrie (Morocco) Commerce et l’Industrie (Morocco) Commerce et l’Industrie (Morocco) Non-voting Director of: Société Non-voting Director of: Société Non-voting Director of: Société Non-voting Director of: Société Anonyme des Galeries Lafayette Anonyme des Galeries Lafayette Anonyme des Galeries Lafayette Anonyme des Galeries Lafayette Chairman of: European Banking Chairman of: Investment Banking Chairman of: Investment Banking Chairman of: European Banking Federation, Investment Banking and Financial Markets Committee and Financial Markets Committee Federation, Investment Banking and Financial Markets Committee of the Fédération Bancaire Française, of the Fédération Bancaire Française, and Financial Markets Committee of the Fédération Bancaire Française, Management Board of Institut Management Board of Institut of the Fédération Bancaire Française, Management Board of Institut d’Études Politiques de Paris, d’Études Politiques de Paris, Management Board of Institut d’Études Politiques de Paris, Supervisory Board of Institut Aspen Supervisory Board of Institut Aspen d’Études Politiques de Paris, Supervisory Board of Institut Aspen France, European Financial Round France, Institut de l’entreprise Supervisory Board of Institut Aspen France, Institut de l’entreprise Table, Institut de l’entreprise Member of: Académie des Sciences France, Institut de l’entreprise Member of: Executive Committee Member of: Académie des Sciences morales et politiques, Executive Member of: Académie des Sciences of Mouvement des Entreprises de morales et politiques, Executive Committee of Mouvement morales et politiques, Executive France, Haut Conseil de l’Éducation, Committee of Mouvement des des Entreprises de France, Haut Committee of Mouvement des European Institut International Entreprises de France, Haut Conseil Conseil de l’Éducation, European Entreprises de France, Haut Conseil d’Études Bancaires, International de l’Education, Institut International Financial Round Table, Institut de l’Éducation, European Financial Advisory Panel of the Monetary d’Etudes Bancaires, International International d’Études Bancaires, Round Table, Institut International Authority of Singapore, International Advisory Panel International Advisory Panel d’Études Bancaires, International Capital Markets Advisory Committee of the Monetary Authority of the Monetary Authority of Advisory Panel of the Monetary of the Federal Reserve Bank of of Singapore, International Capital Singapore, International Capital Authority of Singapore, International New York, International Monetary Markets Advisory Committee of the Markets Advisory Committee of the Capital Markets Advisory Committee Conference, International Business Federal Reserve Bank of New York, Federal Reserve Bank of New York, of the Federal Reserve Bank of New Leaders’ Advisory Council International Business Leaders’ International Business Leaders’ York, International Business Leaders’ for the Mayor of Shanghai (IBLAC) Advisory Council for the Mayor Advisory Council for the Mayor Advisory Council for the Mayor of Shanghai (IBLAC) of Shanghai (IBLAC) of Shanghai (IBLAC)
(1) Directorships and other functions shown in italics are not governed by the provisions of Law no. 2001-401 of 15 May 2001 concerning multiple directorships. (2) At 31 December 2010.
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Patrick AUGUSTE Principal function (1) : Technical Services Manager Date of birth 18 June 1951 Functions at 31 December 2010 (1) Director elected to a three-year term by BNP Paribas executive None employees on 22 January 2009 First elected to the Board on: 14 December 1993 Number of BNP Paribas shares held (2): 36 Offi ce address: 20, avenue Georges-Pompidou 92300 LEVALLOIS-PERRET, FRANCE 2 Functions at previous year-ends (the companies listed are the parent companies of the groups in which the functions were carried out) 2009: 2008: 2007: 2006: None None None None
Claude BEBEAR Principal function (1) : Honorary Chairman of AXA Date of birth 29 July 1935 Functions at 31 December 2010 (1) Elected on 13 May 2009. Director of: AXA Assurances Iard Mutuelle, AXA Assurances Vie Mutuelle Term expires at the 2012 AGM Member of the Supervisory Board of: Vivendi First elected to the Board on: 23 May 2000 Non-voting Director of: Schneider Electric Chairman of: IMS-Entreprendre pour la Cité, Institut Montaigne Number of BNP Paribas shares held (2): 3,074 Member of: International Advisory Panel of the Monetary Authority of Singapore Offi ce address: 25, avenue Matignon, 75008 PARIS, FRANCE Functions at previous year-ends (the companies listed are the parent companies of the groups in which the functions were carried out) 2009: 2008: 2007: 2006: Honorary Chairman of: AXA Honorary Chairman of: AXA Chairman of the Supervisory Chairman of the Supervisory Director of: AXA Assurances Iard Director of: AXA Assurances Iard Board of: AXA Board of: AXA Mutuelle, AXA Assurances Vie Mutuelle, AXA Assurances Vie Director of: AXA Assurances Iard Chairman and Chief Mutuelle Mutuelle Mutuelle, AXA Assurances Vie Executive Offi cer of: Finaxa Member of the Supervisory Board Member of the Supervisory Mutuelle (Finaxa merged into AXA of: Vivendi Board of: Vivendi Member of the Supervisory on 16 December 2005) Non-voting Director of: Schneider Non-voting Director of: Board of: Vivendi Director of: AXA Assurances Iard Electric Schneider Electric Non-voting Director of: Mutuelle, AXA Assurances Vie Chairman of: IMS-Entreprendre Chairman of: IMS-Entreprendre Schneider Electric Mutuelle pour la Cité, Institut Montaigne pour la Cité, Institut Montaigne Chairman of: IMS-Entreprendre Member of the Supervisory Member of: International Advisory Member of: International pour la Cité, Institut Montaigne Board of: Vivendi Panel of the Monetary Authority Advisory Panel of the Monetary Member of: International Non-voting Director of: of Singapore Authority of Singapore Advisory Panel of the Monetary Schneider Electric Authority of Singapore, Chairman of: Institut International Advisory Board du Mécénat de Solidarité, of Tsinghua School of Economics Institut Montaigne and Management (Beijing) Member of: International Advisory Panel of the Monetary Authority of Singapore, International Advisory Board of Tsinghua School of Economics and Management (Beijing)
(1) Directorships and other functions shown in italics are not governed by the provisions of Law no. 2001-401 of 15 May 2001 concerning multiple directorships. (2) At 31 December 2010.
2010 Registration document and fi nancial report - BNP PARIBAS 31 CORPORATE GOVERNANCE 2 Board of Directors
Jean Louis BEFFA Principal function (1) : Honorary Chairman of Saint-Gobain Date of birth 11 August 1941 Functions at 31 December 2010 (1) Elected on 13 May 2009. Chairman: Claude Bernard Participations (SAS), JL2B Conseil (SAS) Term expires on 19 July 2010 Vice-Chairman of the Supervisory Board of: Fonds de réserve pour les retraites – FRR First elected to the Board on: 22 October 1986 Member of the Board of Directors of: Compagnie de Saint-Gobain (SA), GDF SUEZ (SA) France, Groupe Bruxelles Lambert – GBL (Belgium), Number of BNP Paribas shares held (2): 15,757 Saint-Gobain Corporation (United States) Offi ce address: “Les Miroirs” Member of the Supervisory Board of: Siemens AG (Germany), Le Monde (SA), 18, avenue d’Alsace 2 Le Monde & Partenaires Associés (SAS), Société Editrice du Monde (SA). 92096 LA DÉFENSE CEDEX FRANCE Functions at previous year-ends (the companies listed are the parent companies of the groups in which the functions were carried out) 2009: 2008: 2007: 2006: Chairman of the Board Chairman of the Board Chairman of the Board Vice-Chairman of the Board of Directors of: Compagnie of Directors of: Compagnie of Directors of: Compagnie of Directors of: BNP Paribas de Saint-Gobain de Saint-Gobain de Saint-Gobain Chairman and Chief Executive Vice-Chairman of the Board Vice-Chairman of the Board Vice-Chairman of the Board Offi cer of: Compagnie of Directors of: BNP Paribas of Directors of: BNP Paribas of Directors of: BNP Paribas de Saint-Gobain Chairman of: Claude Bernard Chairman of: Claude Bernard Chairman of: Claude Bernard Chairman of: Claude Bernard Participations Participations Participations Participations Director of: GDF SUEZ, Groupe Director of: GDF SUEZ, Groupe Director of: Gaz de France, Director of: Gaz de France, Bruxelles Lambert (Belgium), Bruxelles Lambert (Belgium), Groupe Bruxelles Lambert Groupe Bruxelles Lambert Saint-Gobain Corporation Saint-Gobain Corporation (Belgium), Saint-Gobain (Belgium), Saint-Gobain (United States) (United States) Cristaleria SA (Spain), Cristaleria SA (Spain), Member of the Supervisory Member of the Supervisory Saint-Gobain Corporation (USA) Saint-Gobain Corporation (USA) Board of: Siemens AG Germany, Board of: Siemens AG (Germany), Member of the Supervisory Permanent representative of: Le Monde SA, Le Monde Le Monde SA, Le Monde Board of: Le Monde SA, Le Monde Saint-Gobain PAM & Partenaires Associés (SAS), & Partenaires Associés (SAS), & Partenaires Associés (SAS), Chairman of the Supervisory Société Editrice du Monde Société Éditrice du Monde Société Éditrice du Monde Board of: the A.I.I. (Agence de l’Innovation Industrielle) Member of the Supervisory Board of: Le Monde SA, Le Monde Partenaires AS (SAS), Société Éditrice du Monde (SAS)
Suzanne BERGER Principal function (1) : Professor of Political Science at the Massachusetts Institute of Technology, Cambridge, Massachusetts (USA) – Director of the MIT International Science and Technology Initiative (MISTI) Date of birth 11 March 1939 Functions at 31 December 2010 (1) Elected on 21 May 2008. Term expires at the 2011 AGM Member of: American Academy of Arts and Sciences First elected to the Board on: 8 March 2007 Research associate and member of: the Executive Committee of Center for European Studies at Harvard University Number of BNP Paribas shares held (2): 850 Offi ce address: 30, Wadsworth Street, E53-451, CAMBRIDGE, MA 02139-4307 USA Functions at previous year-ends (the companies listed are the parent companies of the groups in which the functions were carried out) 2009: 2008: 2007: Member of: American Academy Member of: American Academy Member of: American Academy of Arts and Sciences of Arts and Sciences of Arts and Sciences Research associate and member Research associate and member Research associate and member of the Executive Committee of: of the Executive Committee of: of the Executive Committee of: Center for European Studies Center for European Studies Center for European Studies at Harvard University at Harvard University at Harvard University
(1) Directorships and other functions shown in italics are not governed by the provisions of Law no. 2001-401 of 15 May 2001 concerning multiple directorships. (2) At 31 December 2010.
32 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Board of Directors 2
Jean-Laurent BONNAFE Principal function (1) : Chief Operating Offi cer of BNP Paribas Date of birth 14 July 1961 Functions at 31 December 2010 (1) Elected on 12 May 2010. Director of: Carrefour, BNP Paribas Personal Finance, Banca Term expires at the 2013 AGM Nazionale del Lavoro (Italy) First elected to the Board on: 12 May 2010 Chairman of: Management Committee and Executive Committee of BNP Paribas Fortis (Belgium) Number of BNP Paribas held (2): 14,675 (*) Chief Executive Offi cer: BNP Paribas Fortis (Belgium) Offi ce address: 3, rue d’Antin 75002 PARIS, FRANCE 2 Functions at previous year-ends (the companies listed are the parent companies of the groups in which the functions were carried out) 2009: 2008: Director of: Carrefour, Director: Carrefour, BNP Paribas BNP Paribas Personal Finance, Personal Finance, Banca Banca Nazionale del Lavoro Nazionale del Lavoro (Italy) (Italy), BancWest Corporation, Bank of the West
Jean-Marie GIANNO Principal function (1) : Sales associate Date of birth 7 September 1952 Functions at 31 December 2010 (1) Director elected to a three-year term by Member of: Comité des établissements de crédit et des entreprises d’investissement BNP Paribas employees on 5 February 2009 (CECEI), “Confrontations” (a European think tank) First elected to the Board on: 15 March 2004 (Jean-Marie Gianno was an employee representative on the Board of Banque Nationale de Paris from 1993 to 1999) Number of BNP Paribas shares held (2): 10 Offi ce address: 21, avenue Jean Médecin 06000 NICE, FRANCE Functions at previous year-ends (the companies listed are the parent companies of the groups in which the functions were carried out) 2009: 2008: 2007: 2006: Member of: Comité des Member of: Comité des Member of: Comité des Member of: Comité des établissements de crédit et des établissements de crédit et des établissements de crédit et des établissements de crédit et des entreprises d’investissement entreprises d’investissement entreprises d’investissement entreprises d’investissement (CECEI), “Confrontations” (CECEI), “Confrontations” (CECEI), “Confrontations” (CECEI), “Confrontations” (a European think tank) (a European think tank) (a European think tank) (a European think tank)
(1) Directorships and other functions shown in italics are not governed by the provisions of Law no. 2001-401 of 15 May 2001 concerning multiple directorships. (2) At 31 December 2010. (*) Jean-Laurent Bonnafé owns the equivalent of 14,618 BNP Paribas shares under the Company Savings Plan.
2010 Registration document and fi nancial report - BNP PARIBAS 33 CORPORATE GOVERNANCE 2 Board of Directors
François GRAPPOTTE Principal function (1) : Honorary Chairman of Legrand, Director of companies Date of birth 21 April 1936 Functions at 31 December 2010 (1) Elected on 21 May 2008. Director of: Legrand, Legrand France Term expires at the 2011 AGM Member of the Supervisory Board of: Michelin First elected to the Board on: 4 May 1999 Number of BNP Paribas shares held (2): 2,963 Offi ce address: 128, avenue de-Lattre-de-Tassigny 2 87045 LIMOGES, FRANCE Functions at previous year-ends (the companies listed are the parent companies of the groups in which the functions were carried out) 2009: 2008: 2007: 2006: Honorary Chairman of: Legrand Honorary Chairman of: Legrand Honorary Chairman of: Legrand Honorary Chairman of: Legrand Director of: Legrand, Director of: Legrand, Director of: Legrand, Legrand Director of: Legrand, Legrand France Legrand France France Legrand France, Valeo Member of the Supervisory Member of the Supervisory Member of the Supervisory Member of the Supervisory Board of: Michelin Board of: Michelin Board of: Michelin Board of: Michelin Member of: Advisory Committee Member of: Advisory Committee of Banque de France of Banque de France
(1) Directorships and other functions shown in italics are not governed by the provisions of Law no. 2001-401 of 15 May 2001 concerning multiple directorships. (2) At 31 December 2010.
34 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Board of Directors 2
Denis KESSLER Principal function (1) : Chairman and Chief Executive Offi cer of SCOR SE Date of birth 25 March 1952 Functions at 31 December 2010 (1) Elected on 13 May 2009. Director of: Bolloré, Dassault Aviation, Fonds Stratégique Term expires at the 2012 AGM d’Investissement, Invesco Ltd (United States) First elected to the Board on: 23 May 2000 Member of the Supervisory Board of: Yam Invest N.V. (Netherlands) Member of: Commission Economique de la Nation, Board of Directors Number of BNP Paribas shares held (2): 2,344 of Siècle, Board of Directors of Association de Genève, Board of the Offi ce address: 1, avenue du Général-de-Gaulle French Foundation for Medical Research, Strategic Board of the 92074 PARIS LA DÉFENSE CEDEX European Insurance Federation 2 FRANCE Chairman of: Reinsurance Advisory Board, Global Reinsurance Forum Functions at previous year-ends (the companies listed are the parent companies of the groups in which the functions were carried out) 2009: 2008: 2007: 2006: Chairman and Chief Executive Chairman and Chief Executive Chairman and Chief Executive Chairman and Chief Executive Offi cer of: SCOR SE Offi cer of: SCOR SE Offi cer of: SCOR Offi cer of: SCOR Director of: Bolloré, Dassault Chairman of: SCOR Global Chairman of: SCOR Global Life Chairman of: SCOR Global Life, Aviation, Fonds Stratégique P&C SE, SCOR Global Life SE, SCOR Global P&C SE, SCOR SCOR Italia Riassicurazioni d’Investissement, Invesco Ltd U.S. Re Insurance Company Global Life U.S. Re Insurance S.p.a (Italy), SCOR Life U.S. (United States) (United States), SCOR Global Company (United States), Re Insurance (United States), Member of the Supervisory Board Life Re Insurance Company SCOR Reinsurance Company SCOR Reinsurance Company of: Yam Invest N.V. (Netherlands) of Texas (United States), SCOR (United States), SCOR Holding (United States), SCORUS Non-voting Director of: Financière Reinsurance Company (United (Switzerland) AG (Switzerland), Corporation (United States) Acofi SA, Gimar Finance & Cie SCA States), SCOR U.S. Corporation SCOR Reinsurance Company Director of: Bolloré Member of: Commission (United States), SCOR Holding (United States), SCOR US Investissement SA, Dassault Economique de la Nation, (Switzerland) AG (Switzerland) Corporation (United States) Aviation, Amvescap Plc (United Conseil économique, social Chairman of the Supervisory Director of: Bolloré, Cogedim Kingdom), Cogedim SAS, Dexia et environnemental, Board Board of: SCOR Global SAS, Dassault Aviation, Dexia SA (Belgium), SCOR Canada of Directors of the Association Investments SE SA (Belgium), Invesco Plc Reinsurance Company (Canada) de Genève, Board of the Director of: SCOR Global Life (United Kingdom), SCOR Canada Member of the Supervisory French Foundation for Medical SE, SCOR Canada Reinsurance Reinsurance Company (Canada) Board of: SCOR Deutschland Research, Comité des entreprises Company (Canada), Bolloré, Member of the Supervisory (Germany) d’assurance, Conseil Stratégique Dassault Aviation, Dexia SA Board of: Fondation du Risque Permanent representative of: du Comité Européen des (Belgium), Fonds Stratégique Permanent representative of: Fergascor in SA Communication Assurances d’Investissement, Invesco Ltd Fergascor in SA Communication & Participation Chairman of: Reinsurance Advisory (United States) & Participation Non-voting Director of: FDC SA, Board, Global Reinsurance Forum, Member of the Supervisory Non-voting Director of: Gimar Finance & Cie SCA Board of Directors of Siècle Board of: Yam Invest N.V. Financière Acofi (formerly FDC Member of: Commission (Netherlands) SA), Gimar Finance & Cie SCA Économique de la Nation, Non-voting Director of: Member of: Commission Conseil économique, social Financière Acofi SA, Gimar Économique de la Nation, et environnemental, Board Finance & Cie SCA Conseil économique, social of Directors of Siècle, Member of: Commission et environnemental, Board Association de Genève, Comité Économique de la Nation, of Directors of Siècle, des entreprises d’assurance Conseil économique, social Association de Genève, Comité Global Counsellor of: et environnemental, Board des entreprises d’assurance, The Conference Board of Directors of the Association Board of the French Foundation de Genève, Board of the French for Medical Research Foundation for Medical Research, Global Counsellor of: Comité des entreprises The Conference Board d’assurance Chairman of: Board of Directors of Siècle, Cercle de l’Orchestre de Paris Vice-Chairman of: Reinsurance Advisory Board Global Counsellor of: The Conference Board
(1) Directorships and other functions shown in italics are not governed by the provisions of Law no. 2001-401 of 15 May 2001 concerning multiple directorships. (2) At 31 December 2010.
2010 Registration document and fi nancial report - BNP PARIBAS 35 CORPORATE GOVERNANCE 2 Board of Directors
Meglena KUNEVA Principal function (1) : Chairman of the Board of the European Policy Centre (Brussels) Date of birth 22 June 1957 Functions at 31 December 2010 (1) Elected on 12 May 2010. Member of: Board of the American University (Bulgaria) Term expires at the 2013 AGM First elected to the Board on: 12 May 2010 Number of BNP Paribas shares held (2): 10 Offi ce address: Ul. “Plachkovica” - 1 2 Vhod A SOFIA 1164 BULGARIA
Jean-François LEPETIT Principal function (1): Company Director Date of birth 21 June 1942 Functions at 31 December 2010 (1) Elected on 21 May 2008. Director of: Smart Trade Technologies S.A, Shan S.A. Term expires at the 2011 AGM Member of: Board of the QFCRA - Qatar Financial Center Regulatory Authority - (Doha) First elected to the Board on: 5 May 2004 Number of BNP Paribas shares held (2): 8,739 Offi ce address: 30, boulevard Diderot 75572 PARIS CEDEX 12, FRANCE Functions at previous year-ends (the companies listed are the parent companies of the groups in which the functions were carried out) 2009: 2008: 2007: 2006: Director of: Smart Trade Director of: Smart Trade Director of: Smart Trade Director of: Smart Trade Technologies SA, Shan SA Technologies SA, Shan SA Technologies SA, Shan SA Technologies SA, Shan SA Member of: Board of the QFCRA – Member of: Board of the Member of: Board of QFCRA Chairman of: Advisory Board Qatar Financial Center Regulatory QFCRA – Qatar Financial Center - Qatar Financial Center of EDHEC Desk and Asset Authority – (Doha), Collège de Regulatory Authority – (Doha), Regulatory Authority - (Doha), Management Research Center l’Autorité des Marchés Financiers, Collège de l’Autorité des Collège de l’Autorité des Associate professor of: EDHEC Conseil de normalisation des Marchés Financiers Marchés Financiers Member of: Board of QFCRA comptes publics - Qatar Financial Center Regulatory Authority - (Doha)
Laurence PARISOT Principal function (1) : Vice-Chairman of the Board of Directors of IFOP SA Date of birth 31 August 1959 Functions at 31 December 2010 (1) Elected on 13 May 2009. Chairman of: Mouvement des Entreprises de France (MEDEF) Term expires at the 2012 AGM Director of: Coface SA First elected to the Board on: 23 May 2006 Member of the Supervisory Board of: Michelin Number of BNP Paribas shares held (2): 360 Offi ce address: 6/8 rue Eugène-Oudiné 75013 PARIS, FRANCE Functions at previous year-ends (the companies listed are the parent companies of the groups in which the functions were carried out) 2009: 2008: 2007: 2006: Vice-Chairman of the Board Chairman of the Board Chairman of the Board Chairman of: Mouvement des of Directors of: IFOP SA of Directors of: IFOP SA of Directors of: IFOP SA Entreprises de France (MEDEF) Chairman of: Mouvement des Chairman of: Mouvement des Chairman of: Mouvement des Chairman of the Board Entreprises de France (MEDEF) Entreprises de France (MEDEF) Entreprises de France (MEDEF) of Directors of: IFOP SA Director of: Coface SA Director of: Coface SA Director of: Coface SA Member of the Supervisory Member of the Supervisory Member of the Supervisory Member of the Supervisory Board of: Michelin Board of: Michelin Board of: Michelin Board of: Michelin
(1) Directorships and other functions shown in italics are not governed by the provisions of Law no. 2001-401 of 15 May 2001 concerning multiple directorships. (2) At 31 December 2010.
36 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Board of Directors 2
Hélène PLOIX Principal function (1) : Chairman of Pechel Industries SAS, Pechel Industries Partenaires SAS, and FSH SAS Date of birth 25 September 1944 Functions at 31 December 2010 (1) Elected on 21 May 2008. Director of: Lafarge, Ferring S.A. (Switzerland), Completel NV Term expires at the 2011 AGM (Netherlands), Institut Français des Administrateurs First elected to the Board on: 21 March 2003 Permanent representative of: Pechel Industries Partenaires SAS in Ypso Holding (Luxembourg) Number of BNP Paribas shares held (2): 1,609 Member of the Supervisory Board of: Publicis Groupe Offi ce address: 162, rue du Faubourg Saint Honoré Legal manager of: Hélène Ploix SARL, Hélène Marie Joseph SARL, 75008 PARIS, FRANCE Sorepe Société Civile 2 Member of: Investment Committee of the United Nations Staff Pension Fund, Independent Expert Oversight Advisory Committee (IEOAC) of the World Health Organisation (WHO) Functions at previous year-ends (the companies listed are the parent companies of the groups in which the functions were carried out) 2009: 2008: 2007: 2006: Chairman of: Pechel Industries Chairman of: Pechel Industries Chairman of: Pechel Industries Chairman of: Pechel Industries SAS and Pechel Industries SAS and Pechel Industries SAS, Pechel Industries SAS and Pechel Industries Partenaires SAS Partenaires SAS Partenaires SAS and Pechel Partenaires SAS Director of: Lafarge, Ferring SA Director of: Lafarge, Ferring SA Director of: Lafarge, Ferring SA Director of: Lafarge, Boots (Switzerland), Completel NV (Switzerland), Completel NV (Switzerland), Completel NV Group plc (United Kingdom), (Netherlands), Institut Français (Netherlands) (Netherlands) Ferring S.A. (Switzerland) des Administrateurs Permanent representative of: Member of the Supervisory Member of the Supervisory Permanent representative of: Pechel Industries Partenaires in Board of: Publicis Board of: Publicis Pechel Industries Partenaires Ypso Holding (Luxembourg) Legal manager of: Hélène Ploix Representative of: Pechel in Ypso Holding (Luxembourg) Member of the Supervisory SARL, Hélène Marie Joseph SARL, Industries and Pechel Industries Member of the Supervisory Board of: Publicis Groupe Sorepe Société Civile Partenaires SAS in various Board of: Publicis Groupe Legal manager of: Hélène Ploix Member of: Investment companies Legal manager of: Hélène Ploix SARL, Hélène Marie Joseph SARL, Committee of the United Nations Legal manager of: Hélène Ploix SARL, Hélène Marie Joseph SARL, Sorepe Société Civile Staff Pension Fund SARL, Hélène Marie Josèph SARL, Sorepe Société Civile Member of: Investment Sorepe Société Civile Member of: Investment Committee of the United Nations Member of: Investment Committee of the United Nations Staff Pension Fund Committee of the United Nations Staff Pension Fund Staff Pension Fund
Baudouin PROT Principal function (1) : Director and Chief Executive Offi cer of BNP Paribas Date of birth 24 May 1951 Functions at 31 December 2010 (1) Elected on 21 May 2008. Director of: Pinault-Printemps-Redoute, Veolia Environnement, Term expires at the 2011 AGM Erbé SA (Belgium), Pargesa Holding SA (Switzerland) First elected to the Board on: 7 March 2000 Member of: Executive Board of the Fédération Bancaire Française Number of BNP Paribas shares held (2): 137,211 Offi ce address: 3, rue d’Antin 75002 PARIS, FRANCE Functions at previous year-ends (the companies listed are the parent companies of the groups in which the functions were carried out) 2009: 2008: 2007: 2006: Director and Chief Executive Director and Chief Executive Director and Chief Executive Director and Chief Executive Offi cer of: BNP Paribas Offi cer of: BNP Paribas Offi cer of: BNP Paribas Offi cer of: BNP Paribas Director of: Accor, Director of: Accor, Director of: Accor, Director of: Accor, Pinault-Printemps-Redoute, Pinault-Printemps-Redoute, Pinault-Printemps-Redoute, Pinault-Printemps-Redoute, Veolia Environnement, Erbé SA Veolia Environnement, Erbé SA Veolia Environnement, Banca Veolia Environnement, Banca (Belgium), Pargesa Holding SA (Belgium), Pargesa Holding SA Nazionale del Lavoro (Italy), Nazionale del Lavoro (Italy), (Switzerland) (Switzerland) Erbé SA (Belgium), Pargesa Erbé SA (Belgium), Pargesa Chairman of: Fédération Bancaire Member of: Executive Board Holding SA (Switzerland) Holding SA (Switzerland) Française from September 2009 of the Fédération Bancaire Member of: Executive Board Chairman of: Association to August 2010 Française of the Fédération Bancaire Française des Banques Member of: Executive Board of Française the Fédération Bancaire Française
(1) Directorships and other functions shown in italics are not governed by the provisions of Law no. 2001-401 of 15 May 2001 concerning multiple directorships. (2) At 31 December 2010.
2010 Registration document and fi nancial report - BNP PARIBAS 37 CORPORATE GOVERNANCE 2 Board of Directors
Louis SCHWEITZER Principal function (1) : Honorary Chairman of Renault Date of birth 8 July 1942 Functions at 31 December 2010 (1) Elected on 12 May 2010. Chairman of the Board of Directors of: AstraZeneca Plc (United Kingdom), AB Volvo (Sweden) Terms expires at the 2013 AGM Director of: L’Oréal, Veolia Environnement First elected to the Board on: 14 December 1993 Member of the Advisory Committee: Banque de France, Allianz (Germany) Member of the Board of: Fondation Nationale des Sciences Politiques, Institut Français Number of BNP Paribas shares held (2): 14,501 des Relations Internationales, Musée du quai Branly Offi ce address: 8-10, avenue Emile-Zola 2 92109 BOULOGNE-BILLANCOURT CEDEX FRANCE Functions at previous year-ends (the companies listed are the parent companies of the groups in which the functions were carried out) 2009: 2008: 2007: 2006: Chairman of the Board Chairman of the Board Chairman of the Board Chairman of the Board of Directors of: Renault, of Directors of: Renault, of Directors of: Renault, of Directors of: Renault, AstraZeneca Plc (United Kingdom) AstraZeneca Plc AstraZeneca Plc AstraZeneca Plc Chairman of the Supervisory (United Kingdom) (United Kingdom) (United Kingdom) Board of: Le Monde & Partenaires Chairman of the Supervisory Vice-Chairman Vice-Chairman Associés (SAS), Le Monde SA, Board of: Le Monde of the Supervisory Board of: of the Supervisory Board of: Société Editrice du Monde & Partenaires Associés (SAS), Philips (Netherlands) Philips (Netherlands) Director of: L’Oréal, Veolia Le Monde SA, Société Éditrice Director of: Électricité Director of: Électricité Environnement, AB Volvo du Monde de France, L’Oréal, Veolia de France, L’Oréal, Veolia (Sweden) Director of: L’Oréal, Veolia Environnement, AB Volvo Environnement, AB Volvo Chairman of: Haute Autorité Environnement, AB Volvo (Sweden) (Sweden) de lutte contre les discriminations (Sweden) Chairman of: Haute Autorité de Chairman of: Haute Autorité de et pour l’égalité (HALDE) Chairman of: Haute Autorité de lutte contre les discriminations lutte contre les discriminations Member of the Advisory lutte contre les discriminations et pour l’égalité (HALDE) et pour l’égalité (HALDE) Committee of: Banque de France, et pour l’égalité (HALDE) Member of the Advisory Member of the Advisory Allianz (Germany) Member of the Advisory Committee of: Banque Committee of: Banque Member of the Board of: Committee of: Banque de France, Allianz (Germany) de France, Allianz (Germany) Fondation Nationale des Sciences de France, Allianz (Germany) Member of the Board Member of the Board Politiques, Institut Français Member of the Board of: Fondation Nationale of: Fondation Nationale des Relations Internationales, of: Fondation Nationale des Sciences Politiques, des Sciences Politiques, Musée du quai Branly des Sciences Politiques, Institut Français des Relations Institut Français des Relations Institut Français des Relations Internationales, Musée Internationales, Musée Internationales, Musée du Louvre, Musée du quai Branly du Louvre, Musée du quai Branly du Louvre, Musée du quai Branly
Michel TILMANT Principal function (1) : Legal Manager of Strafi n sprl (Belgium) Date of birth 21 July 1952 Functions at 31 December 2010 (1) Elected on 12 May 2010. Senior Advisor: Cinven Ltd (U.K.) Terms expires at the 2013 AGM Director of: Sofi na SA (Belgium), Groupe Lhoist SA (Belgium), Foyer Assurances SA First elected to the Board on: 12 May 2010 (Luxembourg), CapitalatWork Foyer Group SA (Luxembourg), Université Catholique (Michel Tilmant was a non-voting Director de Louvain (Belgium), Royal Automobile Club of Belgium (Belgium) of BNP Paribas from 4 November 2009 to 11 May 2010) Number of BNP Paribas shares held (2): 500 Offi ce address: Rue du Moulin 10 B – 1310 LA HULPE BELGIUM
(1) Directorships and other functions shown in italics are not governed by the provisions of Law no. 2001-401 of 15 May 2001 concerning multiple directorships. (2) At 31 December 2010.
38 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Board of Directors 2
Emiel VAN BROEKHOVEN Principal function (1) : Economist, Honorary Professor of the University of Antwerp (Belgium) Date of birth 30 April 1941 Functions at 31 December 2010 (1) Elected on 12 May 2010. None Terms expires at the 2013 AGM First elected to the Board on: 12 May 2010 (Emiel Van Broekhoven was a non-voting Director of BNP Paribas from 4 November 2009 to 11 May 2010) Number of BNP Paribas held (2): 150 2 Offi ce address: Zand 7 – 9 B – 2000 ANTWERP BELGIUM
Daniela WEBER-REY Principal function (1) : Partner at Clifford Chance, Frankfurt Date of birth 18 November 1957 Functions at 31 December 2010 (1) Elected on 21 May 2008. Member of: Ad Hoc Group of Corporate Governance Experts for Term expires at the 2011 AGM the Financial Services Area of the European Commission, German First elected to the Board on: 21 May 2008 Government Commission on the German Corporate Governance Code Number of BNP Paribas shares held (2): 1,136 Offi ce address: Mainzer Landstrasse 46 D 60325 – FRANKFURT AM MAIN GERMANY Functions at previous year-ends (the companies listed are the parent companies of the groups in which the functions were carried out) 2009: 2008: Member of: Advisory group Member of: Advisory group on corporate governance and on corporate governance and company law of the European company law of the European Commission, Group of Experts Commission, Group of Experts on on “Removing obstacles to “Removing obstacles to cross- cross-border investments” of the border investments” of the European Commission, Ad Hoc European Commission, German Group of Corporate Governance Government Commission on the Experts for the Financial Services German Corporate Governance Area of the European Commission, Code German Government Commission on the German Corporate Governance Code
(1) Directorships and other functions shown in italics are not governed by the provisions of Law no. 2001-401 of 15 May 2001 concerning multiple directorships. (2) At 31 December 2010.
2010 Registration document and fi nancial report - BNP PARIBAS 39 CORPORATE GOVERNANCE 2 Board of Directors
OTHER CORPORATE OFFICERS
Georges CHODRON DE COURCEL Principal function (1) : Chief Operating Offi cer of BNP Paribas Date of birth 20 May 1950 Functions at 31 December 2010 (1) Chairman of: Compagnie d’Investissement de Paris SAS, Financière BNP Paribas SAS, Number of BNP Paribas shares held (2): 69,384 BNP Paribas (Suisse) SA Offi ce address: 3, rue d’Antin Vice-Chairman of: Fortis Bank SA/NV (Belgium) 2 75002 PARIS, FRANCE Director of: Alstom, Bouygues, Société Foncière, Financière et de Participations SA, Nexans, Erbé SA (Belgium), Groupe Bruxelles Lambert – GBL (Belgium), SCOR Holding (Switzerland) AG (Switzerland), SCOR Global Life Rückversicherung Schweiz AG (Switzerland), SCOR Switzerland AG (Switzerland), Verner Investissements SAS Member of the Supervisory Board of: Lagardère SCA Non-voting Director of: Exane, Safran, SCOR SE Functions at previous year-ends (the companies listed are the parent companies of the groups in which the functions were carried out) 2009: 2008: 2007: 2006: Chief Operating Offi cer of: Chief Operating Offi cer of: Chief Operating Offi cer of: Chief Operating Offi cer of: BNP Paribas BNP Paribas BNP Paribas BNP Paribas Chairman of: Compagnie Chairman of: Compagnie Chairman of: Compagnie Chairman of: BNP Paribas d’Investissement de Paris SAS, d’Investissement de Paris SAS, d’Investissement de Paris SAS, Energis SAS, Compagnie Financière BNP Paribas SAS, Financière BNP Paribas SAS, Financière BNP Paribas SAS, d’Investissement de Paris BNP Paribas (Suisse) SA BNP Paribas (Suisse) SA BNP Paribas (Suisse) SA SAS, Financière BNP Paribas Vice-Chairman of: Director of: Alstom, Bouygues, Director of: Alstom, Bouygues, SAS, BNP Paribas (Suisse) SA, Fortis Bank SA/NV (Belgium) Société Foncière, Financière Société Foncière, Financière BNP Paribas UK Holdings Director of: Alstom, Bouygues, et de Participations SA, Nexans, et de Participations SA, Nexans, Limited (United Kingdom) Société Foncière, Financière et de BNP Paribas ZAO (Russia), Erbé Banca Nazionale del Lavoro Director of: Alstom, Banca Participations SA, Nexans, Erbé SA (Belgium), SCOR Holding (Italy), BNP Paribas ZAO Nazionale del Lavoro (Italy), SA (Belgium), Groupe Bruxelles (Switzerland) AG (Switzerland), (Russia), Erbé SA (Belgium), BNP Paribas ZAO (Russia), Lambert – GBL (Belgium), Verner Investissements SAS SCOR Holding (Switzerland) Verner Investissement SAS, SCOR Holding (Switzerland) AG Member of the Supervisory AG (Switzerland), Verner Bouygues, Société (Switzerland), Scor Global Life Board of: Lagardère SCA Investissements SAS Foncière, Financière et Rückversicherung Schweiz AG Non-voting Director of: Exane, Member of the Supervisory de Participations SA, Nexans, (Switzerland), SCOR Switzerland Safran, SCOR SA Board of: Lagardère SCA Erbé SA (Belgium) AG (Switzerland), Verner Non-voting Director of: Exane, Member of the Supervisory Investissements SAS Safran, SCOR SA Board of: Lagardère SCA Member of the Supervisory Non-voting Director of: Exane, Board of: Lagardère SCA Safran, SCOR SA Non-voting Director of: Exane, Safran, SCOR SA
COMPENSATION
COMPENSATION AND BENEFITS PAID TO DIRECTORS’ FEES CORPORATE OFFICERS IN 2010 See report of the Chairman. See Section 4.6 of the consolidated fi nancial statements - note 8.e. – Compensation and benefi ts awarded to the Group’s corporate offi cers.
(1) Directorships and other functions shown in italics are not governed by the provisions of Law no. 2001-401 of 15 May 2001 concerning multiple directorships. (2) At 31 December 2010.
40 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Board of Directors 2
INFORMATION ON STOCK OPTION PLANS Employees other than corporate offi cers receiving/exercising the highest number of options: Weighted average Number of options exercise price granted/exercised (in euros) Date of grant Options granted in 2010 (Sum of 10 largest grants) 230,800 51,.20 05/03/2010 Options exercised in 2010 195,370 43.94 15/05/2001 131,885 2 (10 employees) 21/03/2003 60,381 25/03/2005 3,104
SUMMARY OF REPORTED TRANSACTIONS ON BNP PARIBAS STOCK
Transactions on BNP Paribas stock carried out in 2010 by the corporate and Financial Code that must be reported pursuant to Articles 223–22 offi cers and other individuals listed in Article L.621-8-2 of the Monetary to 223-26 of the AMF’s General Regulations.
Type Amount of the Name Transactions of fi nancial Nature of the Number of transactions Function carried out instrument transaction transactions (in euros) BONNAFE Jean-Laurent BNP Paribas Purchase of 3 569,386.06 Chief Operating Offi cer of BNP Paribas Personally shares 12,947 shares KESSLER Denis BNP Paribas Purchase of 1 3,440.25 Director of BNP Paribas Personally shares 72 shares KUNEVA Meglena BNP Paribas Purachse of 1 551.40 Director of BNP Paribas Personally shares 10 shares LEPETIT Jean-François BNP Paribas Purchase of 1 12,751.86 Director of BNP Paribas Personally shares 278 shares PEBEREAU Michel (*) BNP Paribas Sale of 80,000 2 4,519,280.00 Chairman of the Board of Directors of BNP Paribas Personally shares shares PLOIX Hélène Purchase of 3 9,569.45 Director of BNP Paribas BNP Paribas 183 shares Personally shares Sale of 131 1 7,123.61 shares PROT Baudouin (*) Sale of 50,000 Personally 1 2,368,500.00 Director - Chief Executive Offi cer of BNP Paribas BNP Paribas shares By a related shares Sale of 2,000 1 112,000 party shares SCHWEITZER Louis BNP Paribas Purchase of Personally 3 400,805.52 Director BNP Paribas shares 7,676 shares TILMANT Michel BNP Paribas Purchase of Personally 1 27,250.00 Director of BNP Paribas shares 500 shares WEBER-REY Daniela BNP Paribas Purchase of Personally 1 1,651.32 Director of BNP Paribas shares 36 shares (*) Excluding the exercise of stock-options, details of which are listed in note 8.e. to the consolidated fi nancial statements.
2010 Registration document and fi nancial report - BNP PARIBAS 41 CORPORATE GOVERNANCE 2 Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board and on the internal control procedures implemented by the company
2.2 Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board and on the internal control procedures 2 implemented by the company
This report has been prepared in accordance with Article L.225-37 of the In accordance with the provisions of Article L.225-37 of the French French Commercial Code. Commercial Code, the corporate governance code referred to by BNP Paribas on a voluntary basis in this report is the corporate The information that it contains takes into account, in particular, Annex 1 governance code for listed companies published in December 2008 of European Commission Regulation (EC) no. 809/2004 of 29 April 2004, by the French employers’ organisations AFEP (Association Française the recommendations of the 2010 report by the AMF (the French des Entreprises Privées) and MEDEF (Mouvement des Entreprises de Securities Regulator) on corporate governance and the compensation of France), as supplemented in April 2010. BNP Paribas applies all of the company Directors, and the “Guide to Preparing Registration documents” recommendations of that Code. published by the AMF and updated on 20 December 2010.
CORPORATE GOVERNANCE AT BNP PARIBAS
PRINCIPLES OF GOVERNANCE the preparation and auditing of accounting and fi nancial information. In 2009, the Board decided that these two Committees would meet This report reproduces, in the form of citations or excerpts, all of the twice a year to deal with common subjects relating to the risks and provisions of the Internal Rules dealing with the composition and provisioning policy of BNP Paribas, to consider the mission statement operation of the Board, the allocation of work between Executive of the General Inspection unit and the audit plan of the Statutory Management and the decision-making body, the terms of reference and Auditors, and to prepare the work of the Board on the assessment operation of the specialised Committees, and the conduct of Directors of risk management policies and mechanisms. The two Committees and non-voting Directors (1). deliberate on the basis of documentation prepared jointly by the Group’s Chief Financial Offi cer and Head of Group Risk Management, 1.a The terms of reference of the Board of Directors both of whom attend the meetings of these Committees. ■ The Internal Rules adopted by the Board in 1997 defi ne the duties of the The composition of these two Committees and the work that they Board and of its specialised Committees; they are updated periodically do in their respective fi elds are intended to satisfy the requirements to comply with current laws, regulations and market guidelines, and of banking and prudential discipline, whether provided by law, to keep pace with best practice in the area of corporate governance. contained in provisions defi ned by the regulator or in rules imposed They include a Directors’ code of ethics. by BNP Paribas itself to ensure the quality of its internal control and ■ The specialised Committees of the Board of Directors are the Financial risk policy. Statements Committee, the Internal Control, Risk Management and ■ An extract from the Internal Rules relating to the terms of reference of Compliance Committee, the Corporate Governance and Nominations the Board of Directors and the Committees is attached in an appendix Committee and the Compensation Committee. to this report. In creating an Internal Control and Risks Committee distinct from the Financial Statements Committee, the Board of Directors decided, as 1.b Separation of the functions of Chairman and early as 1994, to separate the powers usually devolved to the Audit Chief Executive Offi cer Committee. In 2007, the Board extended the terms of reference of the The separation of the functions of the Chairman from those of the Chief Internal Control and Risks Committee to any matter relating to the Executive Offi cer demonstrates the desire of BNP Paribas to comply with policy of compliance and to risks, in particular in relation to reputation best practice in the area of governance and to ensure the continuity of or professional ethics. The Internal Control, Risk Management Executive Management under conditions of transparency. The Chairman and Compliance Committee carries out its duties in a way that is informed the General Meeting of Shareholders of this decision, in independent of and complementary to the Financial Statements principle, as early as 14 May 2003. Committee, which is responsible for monitoring matters relating to
(1) On a proposal from the Chairman and in accordance with the Articles of association, the Board of Directors can appoint one or two non-voting Directors. Non-voting Directors take part in meetings of the Board of Directors in a consultative capacity.
42 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board 2 and on the internal control procedures implemented by the company
The duties of the Chairman The powers of the Chief Executive Offi cer On a proposal from the Chairman and the Corporate Governance and The Chief Executive Officer has the broadest powers to act in all Nominations Committee, the Board of Directors explicitly defi ned the circumstances on behalf of BNP Paribas, and to represent the Bank in Chairman’s duties pursuant to certain provisions of the Internal Rules, its relation with third parties. He has authority over the entire Group, and not all of which relate to the organisation and functioning of the Board is responsible for the organisation of internal control procedures and for or the Chairman’s responsibilities pursuant to the legal provisions. These all the information required by the regulations in that regard. duties in no way limit the powers of the Chief Executive Offi cer. He exercises his powers within the limitations of the corporate object, “The Chairman is responsible for ensuring that the quality of the and subject to any powers expressly attributed by law to the General relationship with shareholders is maintained, coordinating closely with Meeting of Shareholders and Board of Directors. 2 any steps taken by Executive Management in this area.” In this connection, Internally, the Regulations of the Board of Directors provide that the the Chairman chairs the Shareholder Liaison Committee, whose task is Chief Executive Offi cer shall request its prior approval for all investment to assist the bank in its communications with individual shareholders; or disinvestment decisions (other than portfolio transactions) in an several times a year, he invites the shareholders to meetings where the amount in excess of EUR 250 million, and for any proposal to acquire company’s strategy is explained. or dispose of shareholdings in excess of that threshold (other than “The Chairman provides assistance and advice to the Chief Executive portfolio transactions). The Chief Executive Offi cer must also ask the Offi cer, while respecting his executive responsibility.” The Chairman Board’s Financial Statements Committee for prior approval of any audit organises his activities to guarantee his availability and to give the Group task involving fees in an amount of over EUR 1 million (excluding VAT). the benefi t of his experience. At the request of the Chief Executive Offi cer, he can take part in any internal meeting on subjects relating to strategy, 1.c Membership of the Board – Directors’ organisation, investment or disinvestment projects, risks and fi nancial independence information. He expresses his opinions without prejudice to the remit of the Board of Directors. Membership of the Board “Coordinating closely with Executive Management, the Chairman can ■ Based on proposals submitted by the Board of Directors, the Combined represent the Group in its high-level relationships, particularly with General Meeting of 12 May 2010 (1) re-elected Louis Schweitzer and major clients and the authorities, both at national and international appointed Michel Tilmant and Emiel Van Broekhoven, formerly non- level.” The Chairman provides support for the teams responsible for voting Directors, and Jean-Laurent Bonnafé and Meglena Kuneva, as covering major companies and international fi nancial institutions; he Directors. Seventeen Directors attended this General Meeting. also contributes to the development of the Bank’s advisory activities, ■ At the end of the Annual General Meeting on 12 May 2010, the Board of particularly by assisting in the completion of major Corporate Finance Directors had eighteen members, sixteen of whom had been appointed transactions. He provides support for Executive Management, or, at by the shareholders. That number was reduced to fi fteen following its request, represents the Bank in its relationships with national and the resignation of Jean-Louis Beffa, which took effect on 19 July 2010. international fi nancial and monetary authorities. He plays an active part As of 31 December 2010, 33.3% (5/15) of the Directors appointed by in discussions concerning regulatory developments and public policies the shareholders were women, and fi ve nationalities are represented affecting the Bank, and, more generally, the banking sector. on the Board. The Chairman contributes to promoting the values and image of Directors’ independence BNP Paribas, both within the Group and externally. He expresses the ■ Following a review of Directors’ personal circumstances by the Bank’s guiding principles, particularly in the area of professional ethics, Corporate Governance and Nominations Committee, the Board and contributes to the Group’s reputation when discharging his personal considered that the following qualify as independent Directors responsibilities as a member of national and international public bodies. according to the independence criteria defi ned by the AFEP-MEDEF These duties require the Chairman to devote his time to the service Corporate Governance Code: Claude Bébéar, Suzanne Berger, of the Group. The initiatives and actions that he takes to carry them François Grappotte, Denis Kessler, Meglena Kuneva, Jean-François out successfully are all taken into account by the Board of Directors in Lepetit, Laurence Parisot, Hélène Ploix, Michel Tilmant (2), Emiel assessing his work and determining his compensation. Van Broekhoven (2) and Daniela Weber-Rey. Based on its assessment An extract from the Internal Rules relating to the duties of the Chairman of Louis Schweitzer before proposing his re-election at the Annual is attached as an appendix to this report. General Meeting of 12 May 2010, the Board took the view that the criterion concerning loss of independence associated with holding offi ce as a Director for more than twelve years did not apply to him. This assessment was made in accordance with the provisions of the AFEP-MEDEF Corporate Governance Code. More than one half of the Directors of BNP Paribas are independent according to that Code.
(1) The Articles of association defi ne the manner of shareholders’ participation in General Meetings. The section of the Registration document and annual fi nancial report entitled “BNP Paribas and its shareholders” contains a summary of those rules and a report on the organisation and business of the General Meeting on 12 May 2010. (2) The Board of Directors considered that Michel Tilmant and Emiel Van Broekhoven can be considered independent according to the criteria set forth in the AFEP-MEDEF Corporate Governance Code (Point 8.5), due to the lack of potential confl icts of interest and the composition of BNP Paribas’ share capital.
2010 Registration document and fi nancial report - BNP PARIBAS 43 CORPORATE GOVERNANCE 2 Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board and on the internal control procedures implemented by the company
■ The two employee representatives on the Board, Patrick Auguste and ■ Three Directors appointed by the shareholders, Michel Pébereau, Jean-Marie Gianno, do not qualify as independent Directors according Chairman of the Board of Directors, Baudouin Prot, Director and Chief to the criteria contained in the AFEP-MEDEF Corporate Governance Executive Offi cer, and Jean-Laurent Bonnafé, Chief Operating Offi cer, do Code, despite their status and the method by which they were elected, not qualify as independent Directors according to the criteria contained which nevertheless are a guarantee of their independence. in the AFEP-MEDEF Corporate Governance Code.
The following table shows the situation of each Director with regard to the independence criteria contained in the AFEP-MEDEF Corporate Governance 2 Code: ➤ SITUATION OF THE DIRECTORS WITH REGARD TO THE INDEPENDENCE CRITERIA OF THE AFEP-MEDEF CODE
1st criterion 2nd criterion 3rd criterion 4th criterion 5th criterion 6th criterion 7th criterion M. PEBEREAU x o o o o x o P. AUGUSTE x o o o o x o C. BEBEAR o o ooooo S. BERGER ooooooo J.L. BONNAFÉ x o ooooo J.M. GIANNO xoooooo F. GRAPPOTTE o o ooooo D. KESSLER o o ooooo M. KUNEVA o o ooooo J.F. LEPETIT ooooooo L. PARISOT ooooooo H. PLOIX ooooooo B. PROT xoooooo L. SCHWEITZER o o o o o x (*) o M. TILMANTooooooo E. VAN BROEKHOVEN o o ooooo D. WEBER-REY o o ooooo Key: “o”: compliance with independence criterion defi ned in the AFEP-MEDEF Code. “x”: non-compliance with an independence criterion defi ned in the AFEP-MEDEF Code. 1st criterion: Not an employee or corporate offi cer of the Company within the previous five years. 2nd criterion: No issue of corporate offi ces held in another company. 3rd criterion: No material business relationships. 4th criterion: No close family ties to a corporate offi cer. 5th criterion: Not an auditor of the Company within the previous fi ve years. 6th criterion: Not a Director of the Company for more than twelve years. 7th criterion: Not a major shareholder. (*) Refer to comment above in the paragraph entitled “Directors’ independence”.
■ On a proposal from the Corporate Governance and Nominations ■ Affectio societatis, which encourages Directors on the Board, which Committee, the Board of Directors has taken the view that the main collectively represents the shareholders, to be committed to the personal qualities required to ensure Directors’ independence, in Company; in particular, affectio societatis promotes the Director’s addition to compliance with the criteria defi ned in the AFEP-MEDEF proper understanding of the business’s culture and ethics; Corporate Governance Code, are as follows: ■ The procedure for recruiting members of the Board of Directors ■ Competence, based on experience and ability to understand the makes use of the information and assessments of the members of issues and risks, the Corporate Governance and Nominations Committee and of the
■ Courage, in particular to express opinions and make a judgment, Chairman of the Board of Directors, in order to select candidates likely to have the desired personal and professional qualities, according to ■ Availability, which allows for the necessary detachment and the criteria defi ned by the Board. encourages the Director to be committed to the exercise of his offi ce,
44 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board 2 and on the internal control procedures implemented by the company
1.d The Directors’ code of ethics ■ The Directors have unrestricted access to the minutes of meetings of Board Committees. ■ BNP Paribas complies with European Regulation 809/2004 of ■ 29 April 2004. Meetings of the Committees provide an opportunity to update the Directors on the topical issues on the agenda. In addition, the Board is As far as the Board is aware, none of the Directors is in a situation kept informed of changes in the reference texts concerning governance, of confl ict of interest. In any event, the Board’s internal regulations particularly in the banking business. At its last ordinary meeting of require them to report “any, even potential, situation of confl ict of the year, the Board of Directors considered the recommendations interest” and to refrain from “taking part in voting on the relevant contained in the guide relating to the prevention of insider dealing decision.” As far as the Board is aware, there are no family ties between offences, published by the AMF on 3 November 2010. The Directors the members of the Board. were informed of the periods during which they may, save in special 2 As far as the Board is aware, none of its members has been found circumstances, carry out any transactions in relation to BNP Paribas guilty of fraud “during at least the last fi ve years” or been associated, shares in 2011. as the member of an administrative, management or supervisory body, ■ Upon taking up offi ce, new Directors receive documentation about the or as the Chief Executive Offi cer, with any insolvency, sequestration or Group, its characteristics, organisation and recent fi nancial statements, liquidation proceedings “during at least the last fi ve years”. together with a set of references on the information available on the As far as the Board is aware, no member of the Board of Directors is Group’s websites. The Board Secretary provides them with the main subject to any “offi cial public accusation and/or penalty”. No Director legal provisions relating to the defi nition, communication and use has been prohibited from acting in an offi cial capacity “during at least of insider information. He provides them with the Board’s Internal the last fi ve years”. Rules and organises a programme of working meetings between Apart from regulated agreements and commitments, there are no them and the Group’s operational and line managers, relevant to the arrangements or agreements with key shareholders, customers, requirements of their position and personal priorities. suppliers or other persons that involve the selection of any member of the Board of Directors. 2. MEETINGS OF THE BOARD ■ The Directors must carry out their duties in a responsible manner, AND COMMITTEES IN 2010 particularly as regards the regulations relating to insider dealing. In particular, they are bound to comply with the legal provisions relating ■ The Board of Directors met nine times in 2010, including twice in to insider information, and are also asked to refrain from carrying specially convened meetings. The average attendance rate of Directors out any transactions in relation to BNP Paribas shares that could be at Board meetings was 94%. In addition, the Board met twice for a regarded as speculative. strategic seminar. ■ Pursuant to the application of accounting standards, the Directors ■ The Financial Statements Committee met four times, and its members have confi rmed that they have not received any nancialfi support had a 100% attendance record. from BNP Paribas or from any company in the Group that was not ■ The Internal Control, Risk Management and Compliance Committee provided on market terms. met four times with an average attendance rate of 91%. ■ An extract from the Internal Rules relating to the conduct of Directors ■ The Financial Statements Committee and the Internal Control, Risk is attached in an appendix to this report. Management and Compliance Committee met twice with an average attendance rate of 93%. These two Committees thus met ten times 1.e Directors’ training and information during 2010, whether together or separately.
■ Pursuant to the Internal Rules, every Director can ask the Chairman or ■ The Corporate Governance and Nominations Committee met three the Chief Executive Offi cer to provide him with all the documents and times with an average attendance rate of 89%. information necessary for him to carry out his duties, to play a useful ■ The Compensation Committee met six times with an average part in the meetings of the Board of Directors and to take informed attendance rate of 94%. decisions, provided that such documents are necessary to the decisions to be taken and connected with the Board’s powers.
2010 Registration document and fi nancial report - BNP PARIBAS 45 CORPORATE GOVERNANCE 2 Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board and on the internal control procedures implemented by the company
➤ ATTENDANCE AT MEETINGS OF THE BOARD AND ITS COMMITTEES IN 2010
Board meetings Committee meetings All meetings Directors 1 2 1 2 1 2 3 M. PEBEREAU 9 9 9 9 100% P. AUGUSTE 9 9 6 6 15 15 100% C. BEBEAR 6 9 2 3 8 12 66% 2 J.L. BEFFA (until 19/07/2010) 5 5 3 4 8 9 89% S. BERGER 9 9 9 9 100% J.L. BONNAFE (from 12/05/2010) 4 4 100% J.M. GIANNO 9 9 5 6 14 15 93% F. GRAPPOTTE 9 9 6 6 15 15 100% D. KESSLER 9 9 12 12 21 21 100% M. KUNEVA (from 12/05/2010) 3 4 3 4 75% J.F. LEPETIT 8 9 6 6 14 15 93% L. PARISOT 7 9 3 3 10 12 83% H. PLOIX 9 9 6 6 15 15 100% B. PROT 9 9 9 9 100% L. SCHWEITZER 9 9 5 6 14 15 93% M. TILMANT 8 9 8 9 89% E. VAN BROEKHOVEN 9 9 9 9 100% D. WEBER-REY 9 9 3 3 12 12 100% Average 94% 93% The fi rst column shows the number of meetings attended. The second column shows the total number of meetings held during the year. The third column shows the individual attendance rate.
3. THE WORK OF THE BOARD IN 2010 ■ The Board was informed of the completion of the operations carried out in the context of the adjustments to consolidation scope agreed 3.a Strategy to successfully complete the integration of BNP Paribas Fortis. It considered the amount of the synergies achieved, and fi nalised the The Board of Directors formulates BNP Paribas’ strategy and overall terms and conditions of the proposed merger-takeover of Fortis Banque business objectives based on proposals submitted by Executive France by BNP Paribas and the relevant proposed resolution presented Management, the key elements of which are presented following a to the General Meeting in order to complete that project. documented in-house process. ■ The Board examined the proposed merger of Türk Ekonomi Bankasi It examines and decides on strategic operations in accordance with A. Ş. (TEB) and Fortis Bank A.Ş. Subsequently, it was informed of the its Internal Rules. It oversees the implementation of the objectives it manner of implementation of the agreement relating to that merger. has approved, particularly in the course of discussions on the fi nancial ■ The Board was not called upon to deliberate on any strategic operation statements and on the budget. that was not in line with approved strategic objectives and would as The Board is also kept regularly informed of the Group’s cash position such have required its prior approval in accordance with the Internal and ongoing commitments. Rules. It reviewed the negotiations of investment projects that it had previously discussed. ■ On numerous occasions, the Board of Directors considered the consequences of the new solvency and liquidity rules for BNP Paribas, ■ The Board met on two occasions for a strategic seminar. for the banking industry and for the fi nancing of the economy. It The fi rst meeting was devoted mainly to the impact of regulatory regularly discussed the issues raised by the crisis, which has affected changes, to geographical ambitions, to human resources, to risks, and the currency and European sovereign debt. to the organisational and industrial issues associated with the Group’s new dimension.
46 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board 2 and on the internal control procedures implemented by the company
The second meeting dealt with the Group’s strategy in its new ■ The Board heard the report of the Chairman of the Internal Control, economic, competitive and regulatory environment, and with the Risk Management and Compliance Committee on the interviews, situation and ambitions of the business lines and divisions. conducted in the absence of the Chairman and Chief Executive Offi cer, ■ The Board discussed the Group’s values and the management of the Head of the General Inspection unit, the Head of periodic control, principles upon which both its operational action plans and Human the Head of permanent control and compliance, the Head of ALM- Resources policies are based. Treasury Department and the Head of Group Risk Management, whose remit covers the whole of the Group’s risk policy. 3.b Internal Control, Risk Management and ■ The Board considered the exchanges of correspondence with the Compliance Autorité de Contrôle Prudentiel and the comments of the Internal Control, Risk Management and Compliance Committee. It was informed 2 ■ In response to the report of the Internal Control, Risk Management and about relations with regulators abroad, as reported by Executive Compliance Committee based on information provided by Executive Management. Management, the Board of Directors regularly discussed the economic, fi nancial and regulatory environment, risk trends, and in particular 3.c Budget, fi nancial statements and results, market and credit risks, as well as the Group’s cash position. fi nancial management and information ■ It discussed the main stakes identifi ed in respect of the different risk categories. Budget ■ It was regularly informed of changes in the Value-at-Risk (VaR) as well In accordance with its usual practice, the Board examined and approved as of the results of risk measurements according to crisis situation the draft budget for 2011 at its last meeting of the year, as presented simulation methods. by Executive Management for the Group as a whole and for its activities ■ It debated the results of the stress tests carried out at the request of and major business lines. the European Committee of Banking Supervisors (ECBS) on the Group’s Financial statements and results exposure to sovereign risks. It was also informed of selected exposures ■ based on the recommendations of the Financial Stability Board. The Board examined and approved the results for the fourth quarter of 2009 and for the year 2009, for the fi rst two quarters and rstfi half ■ The Board adapted the organisation of its work to the new provisions of 2010, for the third quarter and for the fi rst nine months of 2010. of CRBF Regulation 97-02, particularly as regards the assessment of Each quarter, it discussed the revenue trends of the core businesses, policies and risk management mechanisms. It considered the steps the cost/income ratio and the cost of risk per business line. It was taken by Executive Management to ensure that the organisation of informed of the fi ndings of the Financial Statements Committee and Group Risk Management complies with the regulatory requirements. of the Group’s three Statutory Auditors, who routinely attend meetings ■ It was informed of the conclusions of the joint work of the Financial dealing with the results and fi nancial statements. Statements Committee and Internal Control, Risk Management and ■ The Board was informed of changes in the solvency ratio. It considered Compliance Committee on the indicators of risk and profitability the impact of the new rules of the Basel Committee on the risk-weighted of market activities and on the regulatory capital allocated to assets of market activities and the order of magnitude of the new operational risk. It noted the comments of Executive Management on deductions of prudential capital that will gradually have to be made. the methodology for the preparation of annual mission statements It examined the return on equity allocated to the Group’s activities. intended to ensure the effectiveness of periodic controls. ■ The Board of Directors was informed of the analyses carried out by the ■ The Board discussed the issues involved in the changes to the Financial Statements Committee on the adjustments to the opening regulations relating to liquidity. It was addressed by the Head of balance sheet of BNP Paribas Fortis and on the Group’s consolidated Asset and Liabilities Management – ALM-Treasury Department on balance sheet to 31 December 2009 and 30 June 2010. the principles of analysis of the various categories of risk and on the ■ measures put in place to improve the security of decision-making It considered the key choices made concerning the application processes. of accounting standards, which were examined by the Financial Statements Committee on the joint report of the Statutory Auditors ■ It was informed of the manner in which the medium and long-term and the Group’s Chief Financial Offi cer. fi nancing programme agreed for 2010 was carried out. ■ The Board was informed of the fi ndings of the work of the Financial ■ The Board was briefed on internal control activity and on the resources Statements Committee, based on the information provided by Executive allocated to it. It was provided with draft reports for the 2009 fi nancial Management, on the effectiveness of the accounting risk oversight year concerning the measurement and monitoring of risks, and with mechanism. It was also informed by the Committee of the results the draft reports on compliance, permanent control and periodic of the Internal Control audit operations and results and on the key control. audit points raised by Group entities in the context of the certifi cation ■ It was informed of the progress of the steps taken by Executive procedure intended to ensure the reliability of consolidation data. Management to ensure the monitoring and security of market transactions. It was briefed on changes in the amount of operational risk incidents. ■ It was briefed by the Chairman of the Internal Control, Risk Management and Compliance Committee on the results of the periodic control reported by the General Inspection unit and on the principal observations that it had to make.
2010 Registration document and fi nancial report - BNP PARIBAS 47 CORPORATE GOVERNANCE 2 Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board and on the internal control procedures implemented by the company
■ The Board heard the report, presented by the Chairman of the Financial work. The assessment questionnaire contained thirty-four questions, Statements Committee, on the interviews conducted in the absence each with a scale of ratings and covering ten different topics. The of the Chairman and of the Chief Executive Offi cer, of the Statutory Directors were asked to make proposals for improvements on each Auditors and of the Group’s Chief Financial Offi cer. On this occasion, of these topics. reference was made to the actions taken to integrate the businesses ■ In the ratings they gave and the comments they made, the Directors’ of BNP Paribas Fortis into the accounts of the Group’s business lines assessment of the way the Board functioned was favourable. In and core businesses. particular, they indicated their satisfaction with the clarity of the Financial management presentations made to the Board and with the relevance of the topics discussed. They also emphasised the quality of the information ■ The Board was provided with the report on medium and long-term 2 received on the risk identification and management mechanism, fi nancing in 2009 and in the fi rst half of 2010. It was also informed of and the Board’s involvement in the defi nition of the principles of the profi tability of new lending during the same periods. remuneration of groups subject to specifi c regulations. ■ It fi nalised the resolutions to be submitted to the General Meeting The main improvement that the Board of Directors wished to see, of Shareholders and recorded the issue price of the new shares involved deepening the work of the Board on the various aspects of delivered by way of payment of the dividend, in accordance with the operational risk and on a comparison of the Group’s performance legal provisions. and that of its business lines with the performance of representative ■ The Board of Directors was informed of the share purchases made competitors. in the context of the authorisations given by the General Meeting. It considered the results of the public exchange offers for “hybrid” Assessment of Directors – Changes in the membership securities, which had been decided upon at the end of 2009. of the Board and its specialised Committees ■ The Board took the view that its membership guaranteed its ability Financial information to perform its duties in a satisfactory manner. On a proposal from ■ At each meeting devoted to results, the Board examined the draft press the Corporate Governance and Nominations Committee, it specifi ed releases. It approved the draft report of the Board of Directors for 2009 the personal qualities necessary to ensure the independence of the as well as the draft report of the Chairman on the Internal Control Directors, in addition to compliance with the criteria defi ned by the procedures relating to the preparation and processing of accounting AFEP-MEDEF Corporate Governance Code (cf. paragraph 1.c. above). and fi nancial information. Reference to these qualities was included in the Board’s process of ■ The Bank’s long-term ratings from fi nancial rating fi rms are given in assessment of the way it functioned in 2010. the introduction to the Registration document and fi nancial report. ■ The Board of Directors formally noted the resignation of Jean-Louis Beffa. After having discussed Louis Schweitzer’s expertise and the 3.d Corporate governance contribution he had made to the work of the Board and its discussions, the Board of Directors proposed that the General Meeting adopt a Follow-up to the assessment of the Board of Directors in 2009 resolution concerning the renewal of his term of offi ce for a period of three years (cf. paragraph 1.c. above). The Board of Directors The main improvement on 2009 that the Board of Directors wished to see, also proposed that the General Meeting appoint Meglena Kuneva, involved deepening the work of the Board on the Group’s strategy in its Jean-Laurent Bonnafé, Michel Tilmant and Emiel Van Broekhoven new dimension. The Board had also expressed a wish for its consideration as Directors. On a proposal from the Corporate Governance and of risks to be extended more systematically to reputation risk. Nominations Committee, the Board appointed Michel Tilmant as a On 5 March 2010, the Board met at a strategic seminar and devoted a member of the Internal Control, Risk Management and Compliance substantial part of the meeting to discussions with Executive Management Committee, Emiel Van Broekhoven as a member of the Financial on the new challenges facing BNP Paribas (cf. above, paragraph 3.a.). Statements Committee, and Jean-Francois Lepetit as a member of the Compensation Committee. Thus, every member of the Compensation Reputation risk was specifi cally raised by the Head of Compliance and Committee is also a member either of the Financial Statements Permanent Control at a meeting of the Internal Control, Risk Management Committee (Denis Kessler) or of the Internal Control, Risk Management and Compliance Committee. The Committee reported to the Board on and Compliance Committee (François Grappotte and Jean-François the information it had received about the measures taken by Executive Lepetit). This membership of the Compensation Committee is likely to Management, due to the growing importance of reputation risk, in order benefi t the work of the Board of Directors on matching compensation to ensure the integrity of the markets and safeguard clients’ interests. principles to the Bank’s risk policy. Assessment of the Board of Directors in 2010 Assessment of BNP Paribas management ■ For the ninth consecutive year, an assessment was carried out of As in previous years, the Board devoted part of one of its meetings to the organisation and functioning of the Board of Directors and its assessing the Bank’s management. It heard the Chairman’s observations specialised Committees. on the actions taken by the Chief Executive Offi cer and Chief Operating ■ This assessment was carried out on the basis of an anonymous Offi cers. In the absence of Michel Pébereau, the Board also assessed the questionnaire about the organisation of the Board, the manner in Chairman of the Board of Directors. which it functioned, its main areas of activity as appearing in this report (strategy, internal control and risk management, fi nancial management, compensation), the competence of the members of the Board’s Committees, and the quality of the reports submitted on their
48 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board 2 and on the internal control procedures implemented by the company
Internal Rules ■ Based on the above provisions, the Board had decided to grant the ■ On a proposal from the Corporate Governance and Nominations members of the Board of Directors the sum of EUR 753,527 in 2010. Committee, following its examination of the recommendations made The amount paid in respect of 2009 was EUR 532,509. The number of by the AMF in its guide relating to the prevention of insider dealing, Directors was higher in 2010 than in 2009. the Board made amendments to its Internal Rules. On this occasion, ■ Note 8.e. to the fi nancial statements included in this Registration it introduced a number of provisions relating, on the one hand, to the document and annual fi nancial report contains a table showing the legal provisions dealing with insider information, and on the other, to Directors’ fees paid to the members of the Board of Directors. best practice as regards trading in the shares. Compensation of Directors and corporate offi cers ■ The Board examined the conditions on which the employment contract ■ On a proposal from the Compensation Committee, the Board of Directors 2 of Baudouin Prot would be terminated before the expiry of his term decided the variable compensation of Directors and corporate offi cers of offi ce, the appointment having been made prior to 6 October 2008 according to the methods that it had defi ned in 2009. Those methods (AFEP-MEDEF Corporate Governance Code – point 19). were described in note 8.d. to the fi nancial statements included in the Report by the Chairman Registration document and annual fi nancial report. The Board recorded ■ The Board of Directors approved this report by the Chairman on the the results of the calculations derived from the arithmetical criteria manner of preparation and organization of the work of the Board and relating to the Group’s performance. It also assessed how personal on the internal control and risk management procedures implemented targets had been achieved based on its assessment of the individual by BNP Paribas. performances of the Directors and corporate offi cers, and particularly the capacity to anticipate, take decisions and manage demonstrated 3.e Compensation by each of them. ■ Neither the Chairman nor the Chief Executive Offi cer was involved Directors’ compensation in the preparation of the decisions concerning their compensation, ■ Directors who are not Group employees (1) do not receive any nor did they take part in the Board’s vote on decisions setting their compensation from BNP Paribas other than Directors’ fees. compensation. ■ ■ Having considered a comparative study of Directors’ fees carried out The Board decided that the variable compensation allocated to the by a specialised fi rm, the Board adopted the following provisions on Directors and corporate officers would be deferred, as to 50% in a proposal from the Compensation Committee: the case of Michel Pébereau, Baudouin Prot and Georges Chodron de Courcel, and as to 25% in the case of Jean-Laurent Bonnafé; the ■ in the case of the Board of Directors: amounts thus deferred have been carried forward to the years 2011, ■ the individual amount of Directors’ fees calculated on the basis 2012 and 2013, indexed against the value of the shares and made of the planned meetings (7 per year) was kept at EUR 29,728, subject to a return on capital condition for each of the years in question. of which EUR 14,864 (50%) constitutes the fixed part, and ■ The Board also made a decision regarding the principle of the fi xed EUR 2,123.43 per planned meeting (7 per year) constitutes the salary and variable compensation that Jean-Laurent Bonnafé could variable part linked to actual attendance at meetings of the receive in respect of his responsibilities as Chief Executive Offi cer of Board. In order to take account of the particular constraints they BNP Paribas Fortis. face, Board members residing abroad are paid 1.5 times the fi xed portion of Directors’ fees. The Chairman of the Board does not ■ The decisions of the Board of Directors were immediately made public. receive any additional fee in that capacity, ■ The Board of Directors settled the principles governing the
■ in the event of an exceptional meeting of the Board of Directors, compensation of Directors and corporate offi cers for 2010. These each Director present receives an additional fee plus 75%; provisions are described in note 8.e. to the financial statements included in the Registration document and annual fi nancial report. ■ in the case of the specialised Committees:
■ the fi xed part of the fees payable to the members of the Board’s Committees was maintained, and is therefore EUR 15,000 for the A note annexed to the financial statements included in the Chairmen of the Financial Statements Committee and Internal Registration document and annual financial report is specifically Control, Risk Management and Compliance Committee, and devoted to the compensation and social benefits awarded EUR 2,973 for other Chairmen and members of Committees, to Directors and corporate officers. This note also includes ■ the variable parts linked to actual attendance at meetings of the information about the pension plans for the benefit of Directors and Committees were set at: corporate officers and the corresponding commitments for which ■ – 80% of the variable part per planned meeting of the Board, or a provision has been made. It sets out all the compensation and EUR 1,698.74 per meeting, for Chairmen of Committees, benefits awarded to Directors and corporate officers in a standard
■ – 50% of the variable part per planned meeting of the Board, or format, and was prepared in accordance with the AFEP-MEDEF EUR 1,061.71 per meeting, for the members of Committees. Corporate Governance Code and the recommendations of the AMF.
(1) The Directors who are members of the Group are: Patrick Auguste, Jean-Laurent Bonnafé, Jean-Marie Gianno, Michel Pébereau, Baudouin Prot.
2010 Registration document and fi nancial report - BNP PARIBAS 49 CORPORATE GOVERNANCE 2 Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board and on the internal control procedures implemented by the company
Compensation of the categories of employees subject Examination of the fi nancial statements and nancialfi to specifi c regulations information ■ On a proposal from the Compensation Committee, the Board of ■ The Financial Statements Committee examined the financial Directors settled the principles governing the compensation of the statements on the basis of the documents and information provided categories of employees concerned, in accordance with the provisions by Executive Management and the work carried out by the Statutory of CRBF Regulation 97-02 and professional standards reflecting Auditors. It satisfi ed itself as to the relevance and consistency of the the provisions laid down by the Financial Stability Board. Where accounting methods used in the preparation of the parent company appropriate, it made the necessary amendments. and consolidated accounts. Each quarter, it was informed of the effect 2 ■ It was regularly informed of changes in the regulations and of of variations in exchange rates and consolidation scope. It heard the decisions taken by Executive Management to ensure that the presentations made jointly by Group Development and Finance and compensation policy took account of risks, while preserving the the Statutory Auditors on material choices made concerning the competitiveness of BNP Paribas compensation. It was provided with application of accounting standards. At this time, it particularly the report setting out the information relating to the compensation considered the choices made to supplement the impairment criteria policy and practices of market professionals (compensation awarded applied to securities classifi ed as held for sale, and the methods used in 2010 in respect of 2009). for the clearing of fi nancial instruments. ■ The Financial Statements Committee analysed how the Group’s Global Share-Based Incentive Plan – Capital increase consolidated balance sheet had progressed between 31 December 2008 ■ Acting on a proposal from the Compensation Committee, the Board and 31 December 2009, and examined the balance sheet as at adopted the Group’s Global Share-Based Incentive Plan for 2010. 30 June 2010 on the basis of a document prepared for that purpose This plan concerns 2,423,700 stock options and 998,015 shares subject by Group Development and Finance. to performance conditions, for the benefi t of 5,197 benefi ciaries whose ■ It was informed of the main updates to the adjustments of the opening level of responsibility, contribution to results or professional potential balance sheet of BNP Paribas Fortis and of the distribution of the means that they are key elements of the Group’s strategy, development activities of BNP Paribas Fortis and BGL BNP Paribas by division. and profi tability. The Board approved the rules and characteristics of ■ The Financial Statements Committee regularly discussed how the this plan. Group’ solvency ratios were progressing. It was informed of the impact ■ The Board of Directors approved the terms and conditions of a new of the new rules of the Basel Committee on risk-weighted assets and capital increase reserved for employees. prudential capital. The Financial Statements Committee also analysed the return on normalised capital and the return on capital employed per business area. 4. THE WORK OF THE COMMITTEES ■ IN 2010 It examined the development of selected exposures, presented in accordance with the recommendations of the Financial Stability Board, and considered a comparison made with peers. 4.a Financial Statements Committee ■ When reviewing the fi nancial results for each quarter, the Financial In 2010, the membership of the Financial Statements Committee Statements Committee interviewed the Group’s Chief Financial Offi cer. remained unchanged, comprising Louis Schweitzer (Chairman), Patrick After analysing the fi nancial statements for the 2009 financial year, Auguste, Denis Kessler and Hélène Ploix. The majority of its members have it interviewed the Chief Financial Offi cer without the Chairman or the experience and expertise in the areas of corporate fi nancial management, Chief Executive Offi cer being present. It listened to the comments accounting and fi nancial information. and fi ndings of the Statutory Auditors concerning the results for each The Committee’s membership complies with the AFEP-MEDEF Corporate quarter. In the absence of the Chairman, the Chief Executive Offi cer and Governance Code. It does not include any member of Executive the Group’s Chief Financial Offi cer, it interviewed the Statutory Auditors Management. Its duties and working methods are set out in the Board’s and asked them any questions it considered necessary, particularly in Internal Rules, updated in 2009 to take account of the amendments to relation to the integration of Fortis in the accounts and the treatment CRBF Regulation 97-02. of valuations and reserves. To ensure that the Committees’ information and knowledge are updated, Accounting internal control the Group’s Chief Financial Offi cer, who attends its meetings, makes ■ Every quarter, the Financial Statements Committee examined the presentations on important subjects, which are then examined and summary of audit control points reported by Group entities in the discussed in the presence of the Statutory Auditors. context of certifi cation of their financial statements. The Financial Statements Committee met four times, and its members ■ It analysed the distribution and evolution of the levels of risk detected had a 100% attendance rate. It also met twice with the Internal Control, in each of the thirty major accounting controls. Risk Management and Compliance Committee. Documents relating to ■ It examined how the supervisory mechanism set up in accordance with the agenda, and in particular documentation concerning the quarterly, CRFB Regulation 97-02 had performed, and considered the assessment half-yearly and annual results and fi nancial statements, are prepared of the accounting internal control environment carried out on the basis in a standard format for presentation. of information provided by Group entities. An extract from the Internal Rules relating to the duties of the Financial ■ The Financial Statements Committee examined the section of the Statements Committee appears in an appendix to this report. 2010 Chairman’s draft report concerning internal control procedures relating to the preparation and treatment of accounting and fi nancial information, and recommended its approval by the Board of Directors.
50 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board 2 and on the internal control procedures implemented by the company
Joint meetings with the Internal Control, Risk Market, counterparty and credit risks, liquidity Management and Compliance Committee ■ At each of its meetings, the Committee reviewed changes in market, ■ The Committees deliberated, taking into account the provisions of counterparty and credit risks based on information presented by CRBF Regulation 97-02, on the basis of the report on the measurement Group Risk Management (GRM). The head of GRM and his assistants and supervision of risks and of a note prepared for its purposes by specialised in the various risk categories were interviewed by the the Head of Group Risk Management on how the mechanisms put in Committee and answered its questions concerning their particular place had performed. areas of responsibility. The Committee regularly examined how credit ■ The Committees examined the decision-making and control procedures risks were evolving in the retail businesses. It analysed the geographical and the mechanism for managing liquidity risk. They considered the distribution of the portfolio and considered the conclusions of the Risk 2 objectives and organisation of the management of interest rate risks, Policy Committees devoted, in particular, to the main industrial sectors exchange rate risks and liquidity risks. and concentrations. It reviewed the main corporate exposures. ■ ■ They examined how the amount of losses and gains associated with The Internal Control, Risk Management and Compliance Committee operational incidents had evolved, and considered the proportion of was informed of selected exposures according to the recommendations capital allocated to operational risks. of the Financial Stability Board, as was the Financial Statements Committee. It examined the combined exposures of BNP Paribas and ■ They were informed of the Statutory Auditors’ audit plan and of the BNP Paribas Fortis to sovereign risks. mission statement of the General Inspection unit for 2011. They considered the methodology applied by the latter to ensure the ■ The Committee regularly considered Value-at-Risk (VaR) trends as well effectiveness of periodic controls. as the results of the stress tests carried out in respect of market risks. ■ Relations with the Group’s Statutory Auditors At each of its meetings, the Committee examined the liquidity policy of BNP Paribas. It discussed the market situation and the foreseeable ■ The Financial Statements Committee received certifi cation in writing effects of the new Basel Committee regulations relating to equity from each of the Statutory Auditors as to their independence in the capital and liquidity. It was informed of the gradual completion of the conduct of their mission. programme of medium and long-term issues and of the conditions on ■ In the absence of the Statutory Auditors, it considered the amount of which those issues had been completed. fees paid to them and to the members of their networks. It examined ■ In the absence of the Chairman and Chief Executive Officer, the the summary table of tasks not directly related to auditing and was Committee interviewed the Head of Group Risk Management and the informed, where necessary, of the specifi c nature of each of them. Head of Asset and Liabilities Management. 4.b Internal Control, Risk Management Organisation of the Risks procedure and Compliance Committee ■ The Committee examined the provisions proposed by Executive Management to implement the requirements of the Order of In 2010, the membership of the Internal Control, Risk Management 19 January 2010 supplementing the regulatory risk Control mechanism. and Compliance Committee remained unchanged, comprising François Grappotte (Chairman), Jean-Marie Gianno and Jean-François Lepetit. ■ It noted the actions taken or to be taken to adapt the risk management A majority of two thirds of its members were therefore independent mechanism of BNP Paribas to best market practice. Directors in accordance with the criteria of the AFEP-MEDEF Corporate ■ It was informed of the objectives of the Risk Academy project intended Governance Code. A majority of its members had particular expertise in to promote a risk control culture within the Group. fi nancial matters and in the area of risks, by reason of their training or Internal control, compliance, relations with regulators experience. The Committee did not include any members of Executive Management. ■ The Committee was provided with the draft 2009 report on Compliance, permanent operational control and business continuity. In 2010, the Committee met four times and its members had an It considered the new organisation including Fortis and analysed attendance rate of 91%. It also met twice with the Financial Statements trends in operational risk incidents. It was informed of the main frauds Committee, and all its members attended these meetings. Documents committed against the Bank and of the lessons learned from analysis relating to the agenda are sent to Committee members in advance, in a of the anomalies detected by those in charge of permanent control. standard format. Documentation relating to market, counterparty and It also considered the provisions adopted by Executive Management credit risks is automatically accompanied by a summary note. to reinforce the compliance mechanism intended to safeguard the An extract from the Internal Rules relating to the duties of the Internal interests of the customer and market integrity. In the absence of Control, Risk Management and Compliance Committee is attached in an the Chairman and Chief Executive Offi cer, it interviewed the Head of appendix to this report. Compliance and of permanent control.
2010 Registration document and fi nancial report - BNP PARIBAS 51 CORPORATE GOVERNANCE 2 Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board and on the internal control procedures implemented by the company
■ The Committee was provided with the draft 2009 report on periodic of the Board of Directors (cf. paragraph 1.b. above). It examined the control. It considered the results of the risk assessment carried out conditions on which the employment contract of Baudouin Prot would by the General Inspection unit and the main observations that it had be terminated before the expiry of his term of offi ce. made in the context of its half-yearly business report. In the absence ■ The Committee assessed the Chairman the Board of Directors, in of the Chairman and Chief Executive Offi cer, it interviewed the Head of his absence. It also assessed the Chief Executive Offi cer and Chief the General Inspection unit in charge of periodic control. Operating Offi cers, in their absence. The assessments of Directors ■ The Committee examined the 2010 draft annual report on internal and corporate offi cers were carried out taking account of the capacity control and recommended its approval by the Board of Directors. to anticipate, take decisions and manage demonstrated by each of 2 ■ It examined the exchanges of correspondence between the Autorité de them in developing the Group’s strategy and preparing for its future. Contrôle Prudentiel and Executive Management, and reported thereon ■ The Committee proposed to the Board of Directors that it approve to the Board of Directors. an amendment to its Internal Rules in accordance with the recommendations published by the AMF on 3 November 2010 on the 4.c Corporate Governance and Nominations prevention of insider dealing. Committee ■ It examined the part of the Chairman’s draft report devoted to The members of the Corporate Governance and Nominations Committee corporate governance, and recommended its approval by the Board are Claude Bébéar (Chairman), Laurence Parisot and Daniela Weber- of Directors. Rey. Its members are independent Directors who have experience of corporate governance issues and of putting together management teams 4.d Compensation Committee in international companies. The members of the Compensation Committee were Denis Kessler The Committee does not include any members of Executive Management, (Chairman), Jean-Louis Beffa (until 19 July 2010) and François Grappotte. but includes the Chairman of the Board of Directors in its work when Jean-François Lepetit was appointed as a member of the Committee with selecting new Directors or non-voting Directors and dealing with the effect from 15 December 2010. The composition of the Committee is in replacement of Directors and corporate offi cers. accordance with the recommendations of the AFEP-MEDEF Corporate Governance Code; its members have experience of compensation The Corporate Governance and Nominations Committee met three times systems and market practices in this area. The Committee does not in 2010, and its members had an attendance rate of 89%. include any members of Executive Management. The Chairman of the An extract from the Internal Rules relating to the terms of reference of Board of Directors is not a member of the Committee, but is invited to the Corporate Governance and Nominations Committee is set out in an take part in its deliberations, except where they concern him personally. appendix to this report. The Committee interviews the Head of Group Human Resources. The ■ The Committee prepared the assessment by the Board of Directors of Compensation Committee met six times in 2010 and its members had how the Board and its specialised Committees functioned. It noted the an attendance rate of 94%. desired improvements made since the previous assessment. An extract from the Internal Rules relating to the duties of the ■ The Committee analysed the composition of the Board of Directors Compensation Committee is attached in an appendix to this report. from the point of view of the diversity of experience and personalities. ■ The Compensation Committee examined all the steps taken by It examined various possible developments having regard to the terms BNP Paribas in accordance with the guidance given by the G20 and of offi ce due to expire in the next few years. the regulations relating to the compensation of groups of employees ■ It made proposals to the Board of Directors concerning the defi nition for whom the variable part of compensation is in the form of a bonus of the personal qualities required to ensure the independence of determined using specifi c methods. It noted the amendments made Directors, in addition to compliance with the criteria defi ned by the to these regulations pursuant to the European directive relating, in AFEP-MEDEF Corporate Governance Code, and reviewed the situation particular, to the prudential supervision of compensation policies. of each Director in the light of these defi nitions. It was informed of the results of a comparative analysis of French ■ The Committee examined the applications of Meglena Kuneva, Jean- and international regulations and market practices. It submitted Laurent Bonnafé, Michel Tilmant and Emiel Van Broekhoven to be to the Board of Directors the considerations that appeared to it appointed as Directors of BNP Paribas. It recommended that the to be appropriate, particularly as regards the consistency of the Board of Directors submit their appointment to the vote at the General compensation and risk policy, together with the amendments that Meeting of Shareholders. should be made, where necessary, to the compensation principles previously drawn up by the Board. ■ It proposed that the Board of Directors appoint Jean-François Lepetit as ■ a member of the Compensation Committee to replace Jean-Louis Beffa, The Committee considered the list identifying the highest compensation that it appoint Michel Tilmant as a member of the Internal Control, paid in respect of 2009, and examined the 2009 report relating to the Risk Management and Compliance Committee, and that it appoint compensation policy and practices sent to the Autorité de Contrôle Emiel Van Broekhoven as a member of the Financial Statements Prudentiel. The Committee also examined a summary of the report Committee. of the General Inspection unit on the compensation process and on the application of the compensation policy. It was informed of the ■ The Committee discussed the nature of the Chairman’s duties, which exchanges of correspondence between Executive Management and did not exclusively relate to the organisation and functioning of the the Compensation Inspector and the Autorité de Contrôle Prudentiel. Board. It submitted a formulation of those duties for the approval
52 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board 2 and on the internal control procedures implemented by the company
■ The Committee discussed the compensation of the Chairman, Chief Management for members of the Executive Committee other than Executive Offi cer and two Chief Operating Offi cers. It fi xed the variable Directors and corporate officers. It examined the draft report on compensation for 2009 and proposed it to the Board of Directors. It allocations of stock options and performance shares in respect of also proposed to the Board of Directors that Jean-Laurent Bonnafé be 2009. It started to carry out a preliminary examination of the envisaged paid a fi xed salary and variable compensation by BNP Paribas Fortis direction of the 2011 programme. due to his executive responsibilities with that company. The Committee ■ The Committee was informed of the compensation of members of reminded the Board of the commitment by Directors and corporate the Executive Committee other than Directors and corporate offi cers, offi cers not to receive stock options or performance shares in 2010. decided upon by Executive Management in respect of 2009. ■ Having considered the results of a survey carried out at its request ■ On several occasions, it discussed a comparative survey of Directors’ 2 by a fi rm specialising in the competitiveness of the compensation fees carried out at its request by an independent fi rm. Having regard of Directors and corporate offi cers, the Committee made a proposal to the noted divergence from market practice, it proposed that the to the Board concerning a method for the determination of variable Board of Directors revise the amount of Directors’ fees allocated to compensation for 2010. At the end of 2010, it started to give Directors, initially by increasing the variable portion allocated in consideration to the principles to govern the compensation of Directors respect of participation at meetings of the Board and its specialised and corporate offi cers for 2011. Committees. The Committee proposed that the Board of Directors ■ The Committee examined, and proposed that the Board of Directors approve the table of allocation of Directors’ fees prepared for the year approve, the characteristics of the 2010 share-based incentive 2010, taking these adjustments into account, as well as the amount programme. It was informed of the allocations envisaged by Executive thus allocated to each Director.
APPENDICES
Report of the Chairman – Point 1.a.
Terms of reference of the Board of Directors and of the specialised ■ supervise the management of the business and the fairness of Committees its accounts,
The Board of Directors ■ review and approve the fi nancial statements, and “The Board of Directors is a collegial body that collectively ■ ensure that the financial information disclosed to the represents all shareholders and acts at all times in the corporate shareholders and the markets is of high quality. interests of the Bank. The Chairman, or the Chief Executive Officer if the functions have It is tasked with monitoring its own composition and effectiveness been separated, submits for review by the Board, at least once a in advancing the Bank’s interests and carrying out its duties. year, drafts of the budget, of the management report and of the various reports required under applicable laws and regulations. Towards these ends: The Chief Executive Officer is required to submit to the Board Based on proposals submitted by the Chief Executive Officer, it for prior approval any investment or disinvestment decision draws up the BNP Paribas business strategy and monitors its (excluding portfolio transactions) of more than EUR 250 million, implementation; and any proposed acquisition or divestment of equity interests It examines any and all issues related to the efficient running of of more than EUR 250 million. The Chief Executive Officer also the business, and makes any and all business decisions within regularly informs the Board of material transactions which fall its remit; below the EUR 250 million threshold. It may decide to either combine or separate the functions of Any material strategic operation which lies outside the approved Chairman and Chief Executive Officer; business strategy must be submitted to the Board for prior approval. It appoints corporate officers for three-year terms; Insofar as the Board of Directors has delegated the necessary It may decide to limit the powers of the Chief Executive Officer; powers to him to issue bonds and securities convertible into the It approves the draft of the Chairman’s report presented along capital of BNP Paribas, whether immediately or in the future, the with the management report; Chairman, or the Chief Executive Officer in the event of those The Board or one or more of its Directors or Committees, or a functions being separated, shall report on the issue of such bonds specific Committee authorised by the Board, may: or securities with the same frequency.”
■ perform any or all verifi cations and Controls that it considers necessary pursuant to the applicable legislation,
2010 Registration document and fi nancial report - BNP PARIBAS 53 CORPORATE GOVERNANCE 2 Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board and on the internal control procedures implemented by the company
Report of the Chairman – Point 1.a.
The specialised Committees of the Board of Directors These Committees meet at their convenience and their meetings may or may not be attended by the Bank’s management. They can use “In order to facilitate the exercise of the Directors’ functions, outside experts if necessary. Committee Chairmen can ask for any specialised Committees of the Board of Directors are formed. Their responsible officer of the Group to be heard in relation to questions remit does not reduce or limit the Board’s powers. within the competence of the relevant Committee, as defined by The Chairman of the Board of Directors ensures that the number, these rules. terms of reference, composition and functioning of the Committees Committees issue opinions intended for the Board of Directors. 2 is at all times suitable for the Board’s requirements and consistent Committee Chairmen, or in the event of their being unable to act, with best practice in the area of corporate governance. another member of their Committee, orally present a summary of When he considers it necessary, the Chairman attends meetings of their work to the next meeting of the Board. the Committees in a consultative capacity. A written report on the meetings of the Committees is prepared and communicated to Directors wishing to receive it, once it has been approved.”
Report of the Chairman – Point 1.b
The Chairman of the Board of Directors He ensures that a close and trusting relationship is maintained with the Chief Executive Officer, and gives him assistance and advice while “In relations with the Company’s other management bodies and respecting his executive responsibilities. external entities, the Chairman is the only person who can act on behalf of the Board and make statements in its name, save in The Chairman manages the work of the Board in order to ensure that exceptional circumstances and where a special task or specific it is in a position to carry out all the tasks for which it is responsible. mandate has been entrusted to another Director. He satisfies himself that the Board is provided in good time, and in The Chairman can represent the Group in its high-level relations, a clear and appropriate form, with the information necessary for it and particularly with major clients and the authorities, both at to carry out its tasks. national and international level, in close coordination with Executive The Chairman is kept regularly informed by the Chief Executive Officer Management. and the other members of Executive Management of significant He ensures that the quality of relations with the shareholders is events and situations affecting the business of the Group, and in maintained, in close collaboration with the steps taken in this area particular: its strategy, organisation, investment and disinvestment by Executive Management. projects, financial operations, risks and financial statements. He ensures that corporate governance principles of the highest He receives from the Chief Executive Officer all the information standards are established and implemented. required by law in respect of the report on internal control. He ensures that the management bodies of BNP Paribas function He can ask the Chief Executive Officer for any information that may properly. assist the Board and its Committees to carry out their tasks. With the support of the Corporate Governance and Nominations He can interview the Statutory Auditors with a view to the preparation Committee, and subject to the approval of the Board and of the of the work of the Board and of the Financial Statements Committee. General Meeting of Shareholders, he strives to build an effective He satisfies himself that the Directors are in a position to carry out and balanced Board, and to manage the processes of replacement their tasks, and in particular, that they have the required information and succession concerning the Board and the appointments that it to participate in the work of the Board and that they have adequate has to deal with. collaboration from the Company’s officers for the specialised He organises the work of the Board of Directors, fixes the timetable Committees to function. He also satisfies himself that the Directors and agenda for meetings of the Board, and convenes them. play an effective part in the work of the Board, with satisfactory attendance, competence and loyalty. He ensures that the work of the Board is well-organised, in a manner conducive to constructive discussion and decision-making. He directs He reports, in a document submitted alongside the management the work of the Board and coordinates its work with that of the report, on the preparation and organisation of the work of the Board, specialised Committees. as well as on the Bank’s internal control procedures and any limits the Board may have decided to place on the Chief Executive Officer’s He satisfies himself that the Board devotes the necessary time to authority.” matters affecting the Company’s future, and in particular its strategy. He satisfies himself that outside Directors of the Company are well-acquainted with the management team.
54 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board 2 and on the internal control procedures implemented by the company
Report of the Chairman – Point 1.d
Conduct of Directors – Code of ethics Directors are recommended to refrain from any transactions that could be regarded as speculative, and in particular from leveraged “Directors shall interact effectively with others in the workplace purchases or sales, or short-term trading. and respect their opinions, and shall express themselves freely on subjects debated in Board meetings, even in the face of opposition. Directors are prohibited from communicating to any person, including their Company’s securities managers, any information that is not in They shall have a strong sense of responsibility towards shareholders the public domain. and other stakeholders. Directors can consult the Group’s Head of Group Compliance and 2 They shall show a high level of personal integrity during the term Permanent Control in relation to any question of professional conduct. of their office, and respect the rules related to their responsibilities. Situation of conflict of interest In the event of a significant change in the functions or positions held, Directors agree to allow the Board to decide whether or not it is Directors must inform the Board of Directors of any, even potential, appropriate for them to continue to serve as Directors of BNP Paribas. situation of conflict of interest, and must refrain from taking part in the vote on relevant decisions. Compliance with laws and regulations A Director who considers himself unable to continue to perform All Directors are required to comply with the legal obligations his functions on the Board, or on the Committees of which he is a and stock market recommendations and regulations relating to member, must resign. information that concerns Directors personally. Confidentiality Directors of American nationality Every Director, and any person asked to attend all or part of the Directors of American nationality must choose not to participate meetings of the Board of Directors and of its specialised Committees, in certain Board discussions in view of the regulatory obligations is bound by a confidentiality obligation concerning the conduct and pertaining to his or her nationality. content of the Board’s deliberations. Ethics and Professional Conduct In particular, they must keep secret any information of a financial and Directors are particularly subject to the legislation relating to insider stock market nature matching the definition of insider information, dealing, whether personally or in respect of functions exercised which is liable to interest competitors or third parties as “economic within companies that are shareholders of BNP Paribas. In particular, intelligence”, or which is confidential in nature and is provided as they are bound to comply with the legal requirements relating to the such by the Chairman. definition, communication and use of insider information, the main Failure to comply with this obligation can give rise to an action in provisions of which are communicated to them upon taking office. damages against the Director or Directors responsible for infringing Directors can only deal in BNP Paribas shares on a personal basis this rule. during the period of six weeks commencing on the day after the Regular attendance publication of the quarterly and annual financial statements, or after the publication of a press release on the Company’s business, Directors must endeavour to take an active part in meetings of the unless during that period they are in possession of information that Board and its Committees, to attend them regularly, and to attend puts them in the position of an insider having regard to the stock General Meetings of Shareholders.” exchange regulations.
2010 Registration document and fi nancial report - BNP PARIBAS 55 CORPORATE GOVERNANCE 2 Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board and on the internal control procedures implemented by the company
Report of the Chairman – Point 4.a
The Financial Statements Committee shall validate Group Development and Finance’s fast-track approval and Control procedure for all “non-audit” engagements involving “The Committee meets at least four times a year. fees of over EUR 50,000. The Committee shall receive on a yearly Membership basis from Group Development and Finance a report on all “non- At least two thirds of the members of the Financial Statements audit” engagements carried out by the networks to which the Group’s Committee satisfy the requirement of independence adopted by the Statutory Auditors belong. 2 Board in the light of market recommendations. Each Statutory Auditor shall report on a yearly basis to the Committee It does not include any member of the Bank’s Executive Management. on its internal control mechanism for guaranteeing its independence, and shall provide a written statement of its independence in auditing Terms of reference the Group. The Committee is tasked with analysing the quarterly, half-yearly and At least twice a year, the Committee shall devote part of a meeting to annual financial statements issued by the Bank and obtaining further a discussion with the team of Statutory Auditors, without any member explanations of certain items prior to presentation of the financial of Executive Management being present. statements to the Board of Directors. The Statutory Auditors shall attend the Committee meetings The Committee shall examine all matters relating to the financial devoted to the review of quarterly, half-yearly and annual financial statements, including the choices of accounting principles and statements. policies, provisions, management accounting data, capital adequacy requirements, profitability indicators, and all other accounting However, the Statutory Auditors shall not attend all or part of matters that raise methodological issues or give rise to potential Committee meetings dealing with their fees or their re-appointment. risks. The Statutory Auditors shall not attend all or part of Committee At least twice a year, the Committee shall analyse the summary of meetings dealing with specific issues that concern a member of their operations and the results of the accounting and financial internal staff. control based on the information communicated to it by Executive Save in exceptional circumstances, the files containing the quarterly, Management. It shall be informed of incidents revealed by the half-yearly and annual results and financial statements shall be accounting and financial internal control, reported on the basis of sent to Committee members at the latest on the Friday or Saturday the thresholds and criteria defined by the Board of Directors, and morning preceding Committee meetings scheduled for the following shall report its findings to the Board of Directors. Monday or Tuesday. It is informed by the Chairman of the Board of Directors of any Where questions of interpretation of accounting principles arise in possible failure to implement corrective measures decided in the connection with the publication of quarterly, half-yearly and annual scope of the accounting and financial internal control, of which he has results, and involve choices with a material impact, the Statutory been directly informed by the Head of periodic control, and reports Auditors and Group Development and Finance shall submit, on a on its findings to the Board of Directors. quarterly basis, a memorandum to the Committee analysing the Relations with the Statutory Auditors nature and significance of the issues involved, presenting the pros and cons of the various possible solutions and explaining the rationale The Committee shall manage the procedure for selection of the for the choices ultimately made.” Statutory Auditors, express an opinion on the amount of fees charged for conducting the statutory auditing engagements and report to the The Committee shall review the draft report of the Chairman of the Board on the outcome of this selection process. Board on internal control procedures relating to the preparation and processing of accounting and financial information. It shall review the Statutory Auditors’ audit plan, together with the Auditors’ recommendations and the implementation of these Interviews recommendations. With regard to all issues within its remit, the Committee may, as it It shall be notified on a yearly basis of the amount and breakdown sees fit, and if it considers it appropriate, without any other member of the fees paid by the BNP Paribas Group to the Statutory Auditors of Executive Management being present, interview the Heads of Group and the networks to which they belong, calculated using a model Finance and Accounting, as well as the Head of Asset and Liabilities approved by the Committee. It shall ensure that the portion of the Management. audit firms’ revenues that BNP Paribas represents is not likely to The Committee may request an interview with the Head of Group compromise the Statutory Auditors’ independence. Development and Finance with regard to any issue within its remit Its prior approval shall be required for any engagement involving for which it may be liable, or for which the Bank’s management total fees of over EUR 1 million (before tax). The Committee shall may be liable, or that could compromise the quality of financial and approve on an ex post basis all other engagements, based on accounting information issued by the Bank.” submissions from Group Development and Finance. The Committee
56 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board 2 and on the internal control procedures implemented by the company
Report of the Chairman – Point 4.a
Provisions common to the Financial Statements Committee and to They shall be briefed in that context on the mission statement of the Internal Control, Risk Management and Compliance Committee the General Inspection unit and on the audit plan of the Statutory Auditors, and shall prepare the work of the Board in assessing the “The Financial Statements Committee and the Internal Control, Risk risk policies and management systems. Management and Compliance Committee shall meet twice a year. They shall deal with common subjects relating to the risk and provisioning policy of BNP Paribas. This meeting shall be chaired by the Chairman of the Financial Statements Committee.” 2
Report of the Chairman – Point 4.b The Internal Control, Risk Management and Compliance Committee periodic controls. It reviews the Bank’s exchanges of correspondence with the General Secretariat of the Autorité de Contrôle Prudentiel. “It shall hold at least four meetings per year. Membership The Committee is briefed on incidents revealed by internal control that are reported on the basis of the thresholds and criteria defined A majority of the members of the Internal Control, Risk Management by the Board of Directors, and reports on its findings to the Board and Compliance Committee shall qualify as independent Directors of Directors. based on the definition used by the Board in accordance with French It analyses the status of recommendations made by the General corporate governance guidelines. Inspection unit that were not implemented. It is informed by No members of the Bank’s Executive Management shall sit on the the Chairman of the Board of Directors of any possible failure Committee. to implement corrective measures decided in the scope of the Terms of reference accounting and financial internal control that is brought directly to his attention by the Head of periodic control, and reports on its The Committee examines the key focuses of the Group’s risk findings to the Board of Directors. management policy, based on measurements of risks and profitability provided to it in accordance with applicable regulations, as well Interviews as on its analyses of specific issues related to these matters and It may interview the Head of the General Inspection unit and of methodologies. periodic controls, the Head of the Group Compliance and Permanent The Committee also examines all compliance-related issues, Control Function and the Head of Group Risk Management, without particularly those in the areas of reputation risk or professional ethics. any other member of Executive Management being present if it considers this appropriate. The Committee analyses the risk measurement and monitoring report. Twice a year it examines the internal control operations and findings It presents the Board of Directors with its assessment concerning the (excluding accounting and financial internal control, which is the methodologies and procedures employed. responsibility of the Financial Statements Committee) based on the It expresses its opinion concerning the way these functions are information provided to it by Executive Management and the reports organised within the Group and is kept informed of their programmes presented to it by the Heads of Permanent Control, Compliance and of work.”
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Report of the Chairman – Point 4.c
The Corporate Governance and Nominations Committee With the Chairman, it prepares resolutions relating to the proposed appointment of Directors by the General Meeting of Shareholders. “The Committee meets as often as necessary. Membership It proposes the appointment of non-voting Directors to the Board of Directors. A majority of the members of the Committee shall qualify as The Committee puts forward recommendations for the post of independent Directors based on the definition used by the Board in Chairman of the Board for consideration by the Board of Directors. accordance with French corporate governance guidelines. 2 Acting jointly with the Chairman of the Board, the Committee puts No members of the Bank’s Executive Management shall sit on the forward recommendations for the post of Chief Executive Officer for Committee. consideration by the Board, and acting on the recommendation of Terms of reference the Chief Executive Officer, it puts forward candidates for the post of Chief Operating Officer. The Committee is tasked with monitoring corporate governance issues. Its role is to help the Board of Directors to adapt corporate The Committee assesses the performance of the Chairman, in his governance practices within BNP Paribas and to assess the absence. It also assesses the performances of the Chief Executive performance of Board members. Officer and Chief Operating Officers, in the absence of the parties in question. It tracks developments in corporate governance at both global and domestic levels, and presents a summary thereof to the Board of It is also responsible for developing plans for the succession of Directors at least once a year. It selects measures that are suitable for corporate officers. the Group and which are likely to bring its procedures, organisation It makes recommendations to the Board of Directors on the and conduct into line with best practice in this area. appointment of Committee Chairmen and Committee members. It regularly assesses the performance of the Board using either its It is also tasked with assessing the independence of the Directors and own resources or any other internal or external procedure that it reporting its findings to the Board of Directors. The Committee shall deems appropriate. examine, if need be, situations arising should a Director be repeatedly It examines the draft report of the Chairman of the Board on corporate absent from meetings.” governance and all other documents required by applicable laws and regulations.
Report of the Chairman – Point 4.d
The Compensation Committee It is tasked with examining all questions relating to the personal status of corporate officers, and in particular compensation, pensions “The Committee meets as often as necessary. and allocations of stock options of the Company, and the provisions Membership governing the departure of members of the Company’s management A majority of the members of the Committee shall qualify as and representative bodies. independent Directors based on the definition used by the Board in It examines the conditions, amount and distribution of stock option accordance with French corporate governance guidelines. programmes. It also examines the terms of allocation of bonus shares. No members of the Bank’s Executive Management shall sit on the With the Chairman, it is also within its remit to assist the Chief Committee. Executive Officer with any matter relating to the compensation of Terms of reference senior executives that the latter might refer to it.” The Committee prepares the work of the Board on the principles governing the compensation policy, particularly as regards market professionals, in accordance with current regulations.
58 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board 2 and on the internal control procedures implemented by the company
INTERNAL CONTROL
The information below concerning the Group’s Internal Control system distributed within the Group and freely available to all Group employees, was provided by Executive Management. The Chief Executive Offi cer is this Charter defi nes internal control as a mechanism for ensuring: responsible for Internal Control systems and procedures, and for all the ■ the development of a strong risk control culture among employees; statutory information in the report on Internal Control. This document ■ was prepared using information provided by the following Group the effectiveness and quality of the Group’s internal operations; functions: Compliance, Risk Management, Finance and Development, ■ the reliability of internal and external information (particularly 2 Legal Affairs and the General Inspection unit. It was validated by the accounting and fi nancial information); decision-making body. ■ the security of transactions; ■ compliance with applicable laws, regulations and internal policies. BNP PARIBAS INTERNAL CONTROL The Charter lays down rules relating to the organisation, lines of REFERENCES responsibility and remit of the various players involved in Internal Control, and establishes the principle that the different control functions Internal controls in the banking sector in France and internationally are (Compliance, General Inspection unit and Risk Management) must at the centre of banking and fi nancial regulations and are governed by operate independently. a wide range of laws and regulations. In this sector, the main regulation applicable to BNP Paribas is CCLRF Regulation 97-02 (1) as amended, which defines the conditions for SCOPE OF INTERNAL CONTROL implementing and monitoring Internal control systems in banks and One of the fundamental principles of Internal Control is that it must investment fi rms. These rules lay down the principles relating to control be exhaustive in scope: it applies to the same degree to all types of systems for transactions and internal procedures, accounting systems risk and to all entities in the BNP Paribas Group, whether operational and information processing, risk and performance measurement systems, (divisions, business lines, functions and territories) or legal (branches and risk supervision and control systems, and internal control documentation subsidiaries capable of consolidation), without exception. It also extends and reporting systems. Under Article 42 of this Regulation, banks are to core services or operational activities that have been outsourced, in required to prepare an annual statutory report on internal control for accordance with regulatory requirements, as well as to companies for the attention of the Board of Directors. which the Group ensures operational management, even if not integrated As required by Regulation 97-02, BNP Paribas has set up an internal in the scope of consolidation. control system (referred to herein as internal control) in which distinct Implementing this principle requires a precise overview of the allocations organisations and managers are in charge of permanent controls of responsibilities and must factor in the ongoing growth in the Group’s (including Compliance and Risk Management) and periodic controls. The businesses. Internal Control system must also take into account, as appropriate, the AMF’s General Regulations (French Securities Regulator), regulations applicable to branches and subsidiaries outside France and to specialised FUNDAMENTAL PRINCIPLES OF INTERNAL operations such as portfolio management and insurance, the most widely CONTROL accepted industry practices in this area and the recommendations of Internal Control at BNP Paribas is based on the following key principles: international bodies dealing with the capital adequacy framework issues, foremost among which are the Basel Committee and the Senior ■ responsibility of operational staff: the permanent control mechanism Supervisory Group. must be incorporated within the operational organisation of the entities. Operational managers must ensure effective control over the activities for which they are responsible, and all employees are INTERNAL CONTROL DEFINITION, under a duty to blow the whistle on any problems or failings of which OBJECTIVES AND STANDARDS they are aware; The Executive Management of the BNP Paribas Group has set up an ■ exhaustiveness of Internal Control (see above, under “Scope of Internal Internal Control system whose main aim is to ensure overall control Control”); of risks and provide reasonable assurance that the Bank’s goals in this ■ segregation of tasks: this applies to the various phases of a transaction, area are being met. This system is defi ned in the Group’s Internal Control from initiation and execution, to recording, settlement and control. The Charter, which serves as its basic internal reference document. Widely segregation of tasks also leads to independent functions carrying out independent controls and to permanent controls and periodic controls;
(1) This document is frequently amended so as to improve the effi ciency of Internal Control mechanisms.
2010 Registration document and fi nancial report - BNP PARIBAS 59 CORPORATE GOVERNANCE 2 Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board and on the internal control procedures implemented by the company
■ proportionality of risks: the scope and number of controls must be ORGANISATION OF INTERNAL CONTROL proportional to the risk level covered. These controls may consist Internal Control at BNP Paribas consists of permanent and periodic in one or more controls carried out by operational managers and, if controls. While they are complementary, they are distinct and necessary, one or more permanent control functions; independent of one another: ■ appropriate governance: involving the various players of the Internal ■ Control and covering all aspects of its organisation and control; the permanent control is an overall process for the ongoing implementation Internal Control Committees are key instruments of such governance; of risk management and monitoring of strategic actions. It is carried out by operational staff, and their line managers, and by independent ■ Internal Control traceability: this relies on written procedures and permanent control functions either within or independent of these audit trails. Controls, results, exploitation and information reported by 2 operational entities; entities to higher Group governance levels must be traceable. ■ periodic control is an overall process for “ex post” verifi cation of the Periodic control teams (General Inspection unit) verify that these operation of the Bank, based on investigations that are conducted by principles are complied with by carrying out regular inspections. the General Inspection unit, which performs these functions on an independent basis.
Board of directors Executive management
Internal Control, Risks and Compliance Committee
INTERNAL CONTROL COORDINATION COMMITTEE
Head of Head of Heads of Head of Head of Heads of Heads of General RISK OTHER FINANCE COMPLIANCE LEGAL & TAX DIVISIONS (1) Inspection unit MANAGEMENT FUNCTIONS
GENERAL RISK COMPLIANCE/ FINANCE BUSINESS OTHER INSPECTION MANAGEMENT 2OPC LEGAL & TAX FUNCTION LINES FUNCTIONS FUNCTION FUNCTION FUNCTION FUNCTIONS
(1) Retail business lines are treated as divisions.
MAJOR PLAYERS INVOLVED WITH ■ Independent permanent control functions. These functions carry out INTERNAL CONTROL second-level controls: ■ Compliance contributes to permanent control of the risk of non- ■ Executive Management, reporting to the Board of Directors, is compliance, so as to ensure that the Group conforms to legal and responsible for the Group’s overall Internal Control system; regulatory provisions, professional and ethical standards, as well ■ Operational staff, at all levels (front/middle/back office, support as to the overall strategy of the Board of Directors and Executive function etc.), and in particular those in the reporting line of command Management guidelines. It is integrated in the operational entities have fi rst-level responsibility for risk management and are leading under the responsibility of the Heads of operating units but the permanent control players. They carry out first-level controls: independence of the team managers in charge of compliance in controls of the transactions handled by them and for which they are the divisions and support functions is ensured, in particular by responsible, controls on the operations or transactions handled by a shared oversight, with the Head of Compliance function,. The other operational staff or management controls; Head of Compliance, who is a member of the Group’s Executive Committee, reports to the Chief Executive Offi cer and represents the Bank before the Autorité de Contrôle Prudentiel with regard to all matters concerning permanent controls.
60 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board 2 and on the internal control procedures implemented by the company
Its dedicated teams are also responsible for supervising, on the COORDINATION OF INTERNAL CONTROL one hand, the systems of permanent control, and on the other, An Internal Control Coordination Committee (ICCC) meeting is held under powers delegated by the Head of Risk Management, the periodically with the main players involved in permanent control (see measurement and oversight of the operational risks of the various above), the Heads of the divisions or their representatives, and the Head areas of business (divisions and business lines) and both support of periodic control. and control functions. Lastly, its Head is responsible for coordinating the Group’s overall This Committee: Internal Control system, in chairing the Internal Control Coordination ■ is chaired by the Head of Compliance, who sits on the Group’s Executive Committee and major cross-functional projects, in particular those Committee, and steers the coordination of the Group’s Internal Control; 2 intended to strengthen the Internal Control system, ■ is not intended to replace the different Group risk management ■ Group Risk Management contributes, in particular through its Committees but to enhance their effectiveness within the overall “second-tier” controls of transactions and new activities, to system; ensuring that the credit and market risks taken by BNP Paribas ■ guarantees the consistency of the Internal Control system and its comply and are compatible with its policy, its desired rating level compliance with regulations; and its profi tability targets. The duties associated with this function ■ seeks to promote the use of shared Internal Control tools; at Group Risk Management level are exercised independently of the divisions and support functions, contributing to the objectiveness ■ contributes to the overall consistency of the annual reports on internal of its permanent control. Its Head, who is a member of the Group’s control and investment services control prepared by the permanent Executive Committee, reports directly to the Chief Executive Offi cer, control and periodic control functions as required under their “Charter of responsibilities”, and of the report of the Chairman of the Board of ■ Finance and Development is responsible for the preparation of Directors on Internal Control procedures. fi nancial statements and quality control management, overseeing project management for the Group’s fi nancial information systems In 2010, the ICCC’s work covered the following main topics: and ensuring the compliance of the Group’s fi nancial structure. Its ■ the applicability of the fraud prevention and detection policy; Head, who is a member of the Group’s Executive Committee, reports ■ the disciplinary policy; directly to the Chief Executive Offi cer, ■ the control of small entities; ■ other functions are key players involved in permanent control in ■ their respective areas of responsibility: Legal, Tax, Information the e-mail archiving policy; Technology & Processes, Human Resources Department; ■ the update of the Internal Control Charter. ■ Periodic control (“third-level” control) is independently exercised by the General Inspection unit for all Group entities. It includes: PROCEDURES ■ inspectors based at headquarters, who are authorised to carry out Checking procedures is one of the key tasks of the permanent control controls throughout the Group, system, alongside identifying and assessing risks, running controls, ■ auditors deployed at geographical or business line hubs, verifying reporting processes and overseeing the monitoring system. Periodic controls fall under the responsibility of the Head of the Written guidelines are distributed throughout the Group and provide General Inspection unit who reports to the Chief Executive Offi cer; the basic framework for the Group’s internal control, setting out the ■ The Board of Directors exercises internal control duties, in particular organisational structures, procedures and controls to be applied. The through the Internal Control, Risk Management and Compliance Compliance Function, at headquarters level, and in the context of the Committee, which: supervision of the permanent operational control system, checks that
■ analyses reports on internal control and on measuring and procedural guidelines are regularly monitored for completeness. Efforts monitoring risks, as well as the General Inspection unit’s reports are continuing to streamline the set of procedures and the applicable on its operations, and exchanges of correspondence with the main standards, improve their distribution and planning, make them more regulators, accessible and design better tools for storing them, both at the level of cross-function procedures and procedures for operational entities (level-3 ■ examines the key focuses of the Group’s risk management policy. procedures). The Heads of the Compliance, Risk Management and General Inspection functions report on the performance of their duties to the Chief Executive The Group’s cross-functional guidelines (levels 1 and 2) are updated as Offi cer, and whenever he or the Board of Directors consider it necessary, part of an ongoing process in which all the core businesses and functions to the Board. They also report periodically to the competent Board actively participate. As regards the organisation of controls, the twice- Committee (as a general rule, the Internal Control, Risks and Compliance yearly surveys on the effectiveness of processes have been integrated Committee) and, as the case may be, directly to the Board of Directors. into the twice-yearly reporting on the permanent control. At their request, they may be interviewed by the Board.
2010 Registration document and fi nancial report - BNP PARIBAS 61 CORPORATE GOVERNANCE 2 Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board and on the internal control procedures implemented by the company
Among the Group’s cross-functional procedures, applicable in all entities, ■ the development of the mechanism to prevent and detect fraud by the following are especially important in terms of controlling risks: the setting up within the Group of a specifi c organisation under the direction and supervision of the persons responsible for permanent ■ procedures dealing with the validation of exceptional transactions, control, and by the development of a project aimed more specifi cally new products and new activities; at small entities. An appropriate disciplinary policy was also defi ned; ■ the procedure for the approval of day-to-day credit and market ■ the introduction of professional certifi cation of employees as required transactions. by regulation. These processes essentially rely on Committees (exceptional transactions, The integration of Fortis continued with a gradual alignment of its new activities and new products Committees, Credit Committees, etc.) permanent control and compliance systems, and the corresponding 2 principally comprising operational staff and permanent control functions procedures, with the Group’s standards. This also provided an opportunity (Risk Management and Compliance, as well as Finance Department, Legal to introduce improved permanent monitoring of the organisation of Department and other functions involved) who exercise a “second-tier” Compliance in the various countries where the Group is established. control of transactions. In the event of a disagreement, it is referred to a higher level in the organisation. At the top of the process are the Committees (Credit Committee, Capital Market Risk Committee and Risk Permanent Operational Control Policy Committee) on which members of Executive Management sit. In The permanent control and operational risk management system was addition, since the end of 2008, a monthly Risk Committee has met, further developed during 2010, in line with the defi ned strategy, with comprising all the members of Executive Management, as well as, in the objective of making operational staff more responsible for the particular, the Heads of Group Risk Management (GRM) and Finance management of risks, strengthening the oversight role of independent Functions, so as to ensure more frequent monitoring of trends in Group functions in respect of such management, and thus adapting to the risks. change in the size of the BNP Paribas Group. Several signifi cant steps are worthy of particular mention: HIGHLIGHTS OF 2010 ■ the responsibilities of the independent control functions in respect of permanent control and operational risk were redefi ned and extended. Group Compliance Their independence was strengthened with the Group function being given greater authority over the business line functions. In addition, During 2010, Compliance undertook a major reorganisation of its central global coordination of operational risk was introduced with the set up team. It combined the areas of expertise that jointly rely on detailed of an operational risk stream; knowledge of the clientele, namely Financial Security (dedicated to ■ the fraud prevention and protection system was redefi ned. Within the the prevention of money-laundering and the fi nancing of terrorism entities exposed to a signifi cant risk, a Head of Fraud Prevention and and corruption, and compliance with financial embargos) and the Protection in charge of operational implementation was appointed. protection of customers’ interests. It set up a dedicated unit aiming Under the umbrella of the Group function in charge of permanent at the coordination of the Retail activities, which are now distributed control and operational risk, a network of independent experts was among the Group’s organisation in seven Retail business lines (French set up in the business lines, to review the systems put in place and to Retail Banking, BNP Paribas Fortis, BNL, Bank of the West/First Hawaiian adapt or improve them as required; Bank, Europe-Mediterranean, Equipment Solutions and Personal Finance) ■ which are directly supervised by the central staff of Compliance in its the global operational risk policy was thoroughly reviewed, based on area of responsibility. It also combined all its IT project management in a number of simple and mobilizing principles, covering the Group in a Services unit, along with the other Compliance support functions, a its new dimension; development which is evidence of the key role now played by IT tools in ■ the norms and standards in terms of business continuity were revised the management of non-compliance risks. to take account of the experience and progress made in this area over the years; In 2010, Compliance was particularly concerned with: ■ the implementation of standard control plans for each major business ■ the continuing transposition of the 3rd European Directive on line process has been widely deployed and has signifi cantly expanded, the prevention of money-laundering and the introduction of new particularly in the area of IT; requirements in the area of professional certifi cation; ■ special attention has been paid to the implementation, within the ■ the issue of compensation of employees whose professional activities required time limits, of the recommendations and actions intended to are likely to have a material impact on fi nancial institutions’ risk make the risk control and management system more secure; exposure, in respect of whom regulation (the Decree of the French ■ Ministry of Economy and Finance published on 13 December 2010) the process of bringing the Fortis entities into line with Group now not only requires that the compensation policy should take into standards in the area of permanent control and operational risk is account the risks involved, but also imposes restrictive rules with well underway and constitutes a primary challenge both of a cultural regard to the composition of their compensation (the ratio between and managerial nature. As regards the economic and regulatory capital fi xed and variable salary), its conditionality and its deferral; calculation, the Group is aiming for convergence in 2012, subject to obtaining the necessary regulatory approvals.
62 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board 2 and on the internal control procedures implemented by the company
2011 should be marked by an increase and by an intensifi cation of the updated this year and 5 new reference standards were prepared and various actions initiated in 2010, and by the achievement of the fi rst are in the process of being reviewed before their planned distribution expected results. in 2011. These reference standards formalise the instructions relating to the preparation of the Risk Assessment and audit plan, governance Periodic control of the function, management of resources, and steering of the activity and its performance; In 2010, the system under the responsibility of the General Inspection ■ the launch at the end of 2010 of an information system achitecture unit was further strengthened: analysis comprising a review of the existing tools, whose objective is ■ the number of General Inspection unit hubs was increased to 25 after to defi ne their future direction; the creation of the Brussels and Turkey hubs in the context of the 2 ■ the design and update of methodological guides, intended to help integration of the audit teams of Fortis Bank, which has now been auditors to prepare their work programme; completed; ■ the Quality Assurance Review (QAR) programme, which since its launch ■ a sub-branch of the central team of roaming inspectors was opened in in November 2006, has enabled the practices of 29 internal audit sites Brussels. These inspectors will contribute to carrying out the General to be reviewed (including 7 in 2010) against professional standards Inspection unit’s audit plan. A second sub-branch is expected to be and in the reference framework defi ned by the function. set up in Asia in 2011. Signifi cant further efforts were made in the area of vocational training. The efforts made to achieve convergence and continuous improvement in Thus, nearly 70,000 hours of training will have been completed by the practices in the area of audit continued in the fi nancial year 2010. They end of December 2010 throughout the General Inspection unit. are based, in particular, on: The number of auditors and inspectors certifi ed to carry out audits (CIA, ■ revision and improvement of the reference standards that govern CISA, etc.) has increased considerably (185 are now certifi ed) partly due internal audit activities in the Group. The 4 reference standards to the integration of Fortis staff but also within the historic scope of relating to the conduct and archiving of the audit assignments were BNP Paribas.
THE INTERNAL CONTROL WORKFORCE At the end of 2010, the various Internal Control functions had the following workforce (in full-time equivalent staff - FTEs): 2009 2009 (excluding (including 2006 2007 2008 Fortis) Fortis) 2010 Compliance (excluding permanent control) 614 740 864 904 1,125 1,413 Permanent Control/operational risk oversight 70 439 562 637 760 315 (1) Group Risk Management 869 881 954 950 2,940 (2) 1,801 (1) Periodic control 902 854 828 824 1,016 1,014 TOTAL 2,455 2,839 3,208 3,315 5,841 4,543 (1) After redeployment – c.f. infra. (2) Before redeployment – c.f. infra.
Second-level permanent control The Fortis “Risks” function, which consisted of about 2,000 FTEs at the end of 2009, has adopted the GRM model, which has resulted in a ■ With an estimated 1,413 FTEs at the end of the 2010 fi nancial year, the large proportion of its staff being redeployed to the business lines and growth in the Compliance workforce is still at a high level this year, operations. At the end of this process, the Risks function integrated in of the order of 26%. This increase should slow down in 2011 to about GRM (excluding BNL and Personal Finance) consisted of 1,470 FTEs at 8%. The ratio of Compliance staff to the total BNP Paribas workforce the end of 2010. is about 0.69%, compared to 0.56% in 2009. Including those BNL Risk and Personal Finance Risk staff, who are ■ The repositioning of the permanent control and operational risk assigned both to the CRO of BNP Paribas and to the respective Heads of oversight function decided upon in 2010 has led to a reallocation to those entities, the global GRM workforce at the end of 2010 amounted the operational entities of part of the workforce (400 FTEs) previously to 1,801 FTEs. counted as part of permanent operational control. With effect from 2010, only staff that can clearly be assigned to second-level controls/ second line of defence functions will be counted. The 2010 data and Periodic control that from previous years are therefore not comparable. The staff of the General Inspection unit amounted to 1,014 FTEs on ■ At the end of 2010, the GRM workforce amounted to 1,077 FTEs. The 31 December 2010, including 957 FTEs devoted to the performance of year was marked by the transfer to GRM of the IT team for market audit (excluding the Function’s support staff) compared to 965 as at and counterparty risks and of credit officers from the Europe- 31 December 2009. Mediterranean entity. GRM continued to strengthen its team with the The global ratio of auditors to audited is 0.53%, calculated on the basis addition of about fi fty staff mainly in the cross-functional areas, in IS of the workforce dedicated to the performance of audit. Risk (the risks of the Investment Solutions division) and in IRB Risk (the risks of the Europe-Mediterranean business line).
2010 Registration document and fi nancial report - BNP PARIBAS 63 CORPORATE GOVERNANCE 2 Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board and on the internal control procedures implemented by the company
INTERNAL CONTROL PROCEDURES RELATING TO THE PREPARATION AND PROCESSING OF ACCOUNTING AND FINANCIAL INFORMATION
ROLES AND RESPONSIBILITIES REGARDING PRODUCTION OF ACCOUNTING AND THE PREPARATION AND PROCESSING FINANCIAL INFORMATION OF ACCOUNTING AND FINANCIAL 2 INFORMATION Accounting policies and rules Acting under the authority of the Chief Executive Officer, Group The local fi nancial statements for each entity are prepared according Development and Finance is responsible for the preparation and to the accounting standards prevailing in the country where the entity processing of accounting and financial information. Its duties and carries on business, while the Group consolidated fi nancial statements responsibilities are defi ned in a specifi c charter and include: are prepared under IFRS (International Financial Reporting Standards) as adopted by the European Union. ■ producing and distributing high quality fi nancial statements; ■ producing quality management accounts, and providing all forecast The Accounting Policies Department within the central Group General quantitative data needed for steering Group policy; Accounting Department defi nes the accounting policies to be applied on a Group-wide basis, which are based on IFRS. It monitors regulatory ■ overseeing project management for the Group’s fi nancial information changes and prepares new internal accounting policies with the level of systems; interpretation necessary to adapt them to the operations carried out by ■ optimising the Group’s fi nancial position; the Group. An IFRS accounting manual has been produced and distributed ■ ensuring that the Group’s fi nancial position is well presented to the to accounting teams within divisions, business lines and entities on the fi nancial markets; internal network communication tools (Intranet) at BNP Paribas. It is regularly updated to refl ect regulatory changes. This central department ■ coordinating the Group’s development strategy and managing its external growth; also handles requests for specific accounting studies made by the accounting entities or business lines when a fi nancial product is designed ■ providing Executive Management with early warnings. or booked in the accounts. The responsibilities of the Finance Function are exercised at different The central Budget and Strategic Management control Department draws levels of the Group: within each accounting entity (1), by the local Finance up management control rules that apply to all the Group’s business Department function, at the level of each division/business line, by the lines. The Group’s accounting and management control policies can be Finance Department function, and at the level of the Group, by Group accessed in real time using internal network tools (Intranet). Development and Finance. The production of accounting and financial data, and the controls Systems used designed to ensure their reliability, are fi rst handled by the Finance Department of the accounting entity, which reports this information to The role of dedicated teams within Group Development and Finance the division and then on to the Group, certifying that it is reliable in includes defi ning the target architecture of the Finance Department’s accordance with the internal certifi cation procedure described below. information systems (accounting systems, cost-accounting systems, accounting and regulatory consolidated reporting systems and For their part, the divisions/business lines/territories then perform consolidated management reporting systems). They facilitate the sharing controls on the data produced, and contribute to the quality of the of information and the implementation of cross-functional projects in a fi nancial statements prepared by the accounting entities, particularly context of increasing convergence of the different existing accounting by carrying out appropriate reconciliations between the accounting and platforms, both at Group and business line level. management data, at their level. The information used to prepare the BNP Paribas Group consolidated Group Development and Finance gathers all the accounting and fi nancial statements is derived from the Bank’s various transaction management information produced by the accounting entities through processing systems, from origination by the Front Offi ce through to the reporting procedures formalised and approved by the divisions/ their accounting entry. Dedicated teams are responsible for defi ning the business lines/territories. It then consolidates these data for use by accounting procedures used in the back offi ce and accounting systems Executive Management or for external reporting to third parties. to apply the accounting principles established by the Accounting Policies Department at operational level. Routing controls are performed at each level of the data transmission chain to ensure these systems are adequately fed. The Group also regularly carries out upgrade maintenance on its systems to adapt them to the growth and increasing complexity of its business.
(1) “Accounting entity” refers to the parent company, BNP Paribas, as well as each of the consolidated subsidiaries and branches.
64 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board 2 and on the internal control procedures implemented by the company
Process for collecting and preparing consolidated internal control environment and key controls intended to ensure the accounting and fi nancial information reliability of the information contained in their consolidation reporting package. The Group has issued accounting internal control guidelines The process for collecting accounting and financial information is for use by the consolidated entities and distributed a standard plan organised around two separate reporting channels, one dedicated to of accounting controls listing the mandatory major controls aimed at accounting data and the other to management data, using the same covering the accounting risk; integrated collection and consolidation software package known as ■ MATISSE (“Management & Accounting Information System”); at local ensuring the correct functioning of the accounting internal control level, the Finance teams enter validated fi nancial and accounting data environment within the Group, in particular through the internal into the system in accordance with Group principles. certifi cation procedure described below; 2 ■ quarterly reporting to Executive Management and the Financial This reporting process applies to the channels dedicated to both fi nancial Statements Committee of the Board of Directors on the quality of the and management accounting data: fi nancial statements being produced within the Group; ■ Accounting data: the procedures for preparing the Group’s fi nancial ■ monitoring implementation by the entities of the Statutory Auditors’ statements are set out in the guidelines distributed to all divisions/ recommendations in conjunction with the divisions/business lines. This business lines and consolidated entities. This facilitates the monitoring is facilitated by use of the dedicated tool FACT (Finance standardisation of accounting and fi nancial data and compliance with Accounting Control Tool) which enables each accounting entity to Group accounting standards. Each Group entity closes its accounts on monitor the recommendations made to it and to regularly report on a monthly or quarterly basis and prepares a consolidation reporting the progress made on the various action plans. Group Development package with an analytical review in accordance with Group reporting and Finance can identify improvements to the accounting internal deadlines. The validation procedures which accompany each phase in control system made within the consolidated entities and, where the reporting process seek to verify that: necessary, provide solutions to any cross-functional problems that ■ Group accounting standards have been correctly applied, may have been identifi ed thanks to the centralised monitoring of such
■ inter-company transactions have been correctly adjusted and recommendations. eliminated for consolidation purposes, The application of Group principles of internal control accounting
■ pre-consolidation entries have been correctly recorded. defi ned by “Group Control & Certifi cation” results in the establishment of dedicated accounting control teams in the Finance Departments of Group The Finance Function of the relevant core business controls the entities. In addition, the pooling approach to the production of accounting consolidation packages from the accounting entities within its scope synthesis within the regional platforms that has been adopted within before reporting them to the department within Group Development and the Group allows for greater harmonisation of the reporting and control Finance in charge of preparing the consolidated fi nancial statements. processes and increases their effectiveness within the entities concerned. ■ Management data: management information is reported on a monthly In this context, the “Control & Certifi cation France” team attached to the basis by each entity and business line to the Finance Function of the “Control & Certifi cation” Department of Group Development and Finance, relevant division and business line, which then reports management is in charge of providing quality control on accounting information data consolidated at its level to the Budget and Strategic Management provided by the French Retail Banking network, and by Corporate and Control unit at Group Development and Finance. Investment Banking businesses that report to BNP Paribas SA (France) For each entity and division/business line, a reconciliation is performed and some French entities whose accounting is handled by the “Reporting between the main income and expense items based on management data France” Department of Group Development and Finance. The key and the profi t and loss account intermediate balances, prior to submitting responsibilities of this team are as follows: the package to the Group reporting system. This is supplemented by an overall reconciliation performed by Group Development and Finance ■ to liaise between the back offi ces feeding the accounting system to ensure consistency between consolidated accounting profi ts and and the Group Accounting Department and to provide training in the management reporting profi ts. These two reconciliations form part of accounting tools made available to them; the procedure for ensuring reliable accounting and management data. ■ to coordinate the “elementary certifi cation” process (described below) whereby the various departments of an entity report on the controls that they have carried out; PROCEDURE FOR CONTROL OF ACCOUNTING ■ to implement second-level accounting controls within all entities AND FINANCIAL INFORMATION within its scope. These controls are in addition to the first-level controls carried out by back offi ces, and particularly rely on accounting Accounting internal control within Group control tools that, in particular, make it possible, in the case of each Development and Finance account, to identify the department responsible for its justifi cation and control, to reconcile the balances recorded in the accounting system To enable it to ensure the monitoring of accounting risks centrally, Group with the balances in the operational systems for each business, and to Development and Finance has a “Control & Certifi cation” Department, identify, justify and monitor the clearing of suspense accounts. comprising, in particular, a “Group Control & Certifi cation” team, which has the following key responsibilities:
■ defi ning the Group’s policy as regards the accounting internal control system. This system provides for the implementation by the accounting entities of a certain number of principles that organise the accounting
2010 Registration document and fi nancial report - BNP PARIBAS 65 CORPORATE GOVERNANCE 2 Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board and on the internal control procedures implemented by the company
Internal Certifi cation Process The FACT (Finance Accounting Control Tool) application also makes it possible to automate the elementary certifi cation process by providing At Group level entities with a dedicated environment in which they can directly manage Group Development and Finance has introduced a process of internal the processes set up at their level. certifi cation of quarterly data produced by the different accounting entities, as well as of the controls performed within Finance departments Oversight arrangements for measuring fi nancial of the divisions/business lines and by the Consolidation Department instruments and determining the results of market within Group Development and Finance. The process uses the FACT transactions (Finance Accounting Control Tool) internet/intranet-based application. 2 Group Development and Finance, which is responsible for the production The Heads of Finance of the entities concerned certify to Group and quality of the Group’s financial statements and management Development and Finance that: accounting data, delegates the production and control of market values ■ the accounting data reported to Group Development and Finance are or models of fi nancial instruments to the different players involved in reliable and comply with Group accounting policies; measuring fi nancial instruments within the overall process of monitoring market risk and management data. ■ the accounting internal control system designed to ensure the quality of accounting data is operating effectively. Controlling these operations, which concerns all players, is the responsibility of the Finance Function. The main certifi cate completed by the entities consolidated by global or proportional integration reproduces all of the major controls defi ned in The purpose of these control procedures is as follows: the standard accounting control plan published by Group Development ■ to ensure that transactions involving fi nancial instruments are properly and Finance. recorded in the Group’s books in accordance with Group policies for This internal certification process forms part of the overall Group producing fi nancial and management data; accounting internal control monitoring system and enables Group ■ to guarantee the quality of fi nancial instrument measurement and Development and Finance, which has overall responsibility for the reporting used both in preparing the financial and management preparation and quality of the Group’s consolidated fi nancial statements, accounts and in managing and monitoring market and liquidity risk; to be informed of any problems in the fi nancial statements and to monitor ■ to ensure that the results of market transactions are determined, the implementation by the accounting entities of appropriate corrective understood and analysed correctly; measures and, if necessary, to set aside appropriate provisions. A report on this procedure is presented to Executive Management and to the ■ to control the related operational risks. Financial Statements Committee of the Board of Directors at the close This permanent control process uses fi rst and second-level controls in of the Group’s quarterly consolidated accounts. accordance with Group internal control Charter guidelines and exists at each level in the organisation, i.e., Group, Corporate and Investment At entity level Banking and in the main territories recording market transactions in The certifi cation procedure vis-à-vis the Group requires a suitably adapted their accounts. accounting internal control system for each accounting entity that gives Finance Departments perform second-level controls and have visibility the local Finance Function an overview of the entire accounting process. over the entire process via dedicated corporate investment banking teams The formalisation of the work of closing using tools to map the processes (“CIB Financial Control”). They decide on the information that must be and associated risks makes it possible to document the controls and reported by the various players: this comprises both quantitative and contributes to achieving this objective. In addition, “Group Control & qualitative data indicating trends in different businesses as well as the Certifi cation” recommends implementing an “elementary certifi cation” (or results and quality of upstream controls carried out. “sub-certifi cation”) process for accounting data whenever the processing of transactions and the preparation of accounting and fi nancial data are Committees that meet on a monthly basis are being set up to bring all organised in a decentralised way that makes such a process necessary. of the players together to discuss the entire range of issues concerning the measurement and recognition of market transactions. As part of the This is a process whereby the providers of information associated with quarterly accounts closing process, the Corporate Investment Banking the performance of accounting controls and with the preparation of Finance Department reports back to an arbitration and decision-making accounting and fi nancial data (e.g. Middle Offi ce, Back Offi ce, Human Committee (“PFC” – Product Financial Control Committee) chaired by the Resources, Accounts Payable, etc.) formally certify that the basic controls Group Chief Financial Offi cer on the actions of the CIB Financial Control designed to ensure the reliability of the accounting and fi nancial data teams and their work to enhance control effectiveness and the reliability for which they are responsible are working effectively. The elementary of the measurement and recognition of the results of market transactions. certifi cates are sent to the local Finance Department, which analyses This Committee meets every quarter and brings together the Directors them, prepares a summary report intended to be used to prepare the of Group Development and Finance-Accounting, Corporate Investment main certifi cate, and liaises with the other players in order to monitor Banking and Group Risk Management. the effectiveness of the system.
66 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Report of the Chairman of the Board of Directors on the manner of preparation and organisation of the work of the Board 2 and on the internal control procedures implemented by the company
PERIODIC CONTROL – CENTRAL The Statutory Auditors also carry out limited reviews on the closing of the ACCOUNTING INSPECTION TEAM quarterly accounts. As part of their statutory audit assignment: ■ The General Inspection unit includes a team of inspectors (the Central they examine any signifi cant changes in accounting standards and Accounting Inspection Team) specialised in fi nancial audits. This refl ects present their recommendations to the Financial Statements Committee the strategy of strengthening the Group’s internal audit capability both concerning choices with a material impact; in terms of technical scope and the areas of accounting risk tackled in ■ they present the Finance Functions of the entities/business lines/ the audit engagements undertaken. divisions, and of the Group, with their conclusions, and in particular with any observations and recommendations intended to improve Its action plan is based on the remote accounting internal control tools certain aspects of the internal control system that contributes to the available to Group Development and Finance and the risk evaluation 2 preparation of the accounting and fi nancial information that they chart set up by the General Inspection unit. examined in the course of their audit. The core aims of the team are as follows: The Financial Statements Committee of the Board of Directors is briefed ■ to constitute a hub of accounting and fi nancial expertise in order to concerning accounting choices that have a material impact, as discussed reinforce the capability of the General Inspection unit when carrying in Section 2.2. “Corporate Governance” above. out inspections in such areas; ■ to disseminate internal audit best practices and standardise the quality of audit work throughout the BNP Paribas Group; CORPORATE COMMUNICATIONS (PRESS RELEASES, SPECIAL PRESENTATIONS, ETC.) ■ to identify and inspect areas of accounting risk at Group level. Financial reports are prepared for external publication by the Investor Relations and Financial Communications team, within Group Development DEVELOPMENT OF THE ACCOUNTING and Finance, for the purpose of presenting the Group’s different activities, INTERNAL CONTROL SYSTEM explaining its fi nancial results and providing details of its development The accounting internal control system is constantly being adapted to strategy to individual shareholders, institutional investors, fi nancial the Group’s requirements. The procedures described form part of an analysts and rating agencies. These materials, including press releases, evolving system that aims to guarantee an adequate level of control earnings releases (notably those for Q4 2010 and FY 2010 issued on throughout the Group. 17 February 2011), fi nancial statements, the Registration document and any updates, share buyback and voting right disclosure statements, and Accordingly, the entities of the Fortis subgroup acquired by BNP Paribas in other specifi c fi nancial presentations and transaction documents are 2009 are gradually deploying the Group’s principles of accounting internal available on the BNP Paribas website, http://invest.bnpparibas.com/en. control. Since September 2010, they have contributed to the process of quarterly certifi cation of the data produced for the Group. The team, which reports to Executive Management and the Chief Financial Offi cer, devises the format in which nancialfi information is In addition, in the context of the centralisation of the work of consolidation published by the Group. It liaises with the divisions and functions when of the subgroups, certificates dedicated to this process have been designing the presentation of the Group’s results, strategic projects and introduced in order to confi rm that key checks have been carried out special presentations for external publication. in respect of the data made available to those subgroups by the central consolidation department. Due to the growing demands of investors and the Group’s determination to be at the leading edge of European corporate communications, BNP Paribas has adopted a detailed communications format designed RELATIONS WITH THE GROUP’S to present its results to the fi nancial markets on a quarterly basis. The STATUTORY AUDITORS Statutory Auditors are associated with the validation and review phase of press releases relating to the closing of quarterly, half-yearly or Each year, the Statutory Auditors issue a report in which they give their annual fi nancial statements, before their presentation to the Financial opinion concerning the fairness of the consolidated fi nancial statements Statements Committee and to the Board of Directors. of the BNP Paribas Group as well as the annual fi nancial statements of the Group’s companies.
2010 Registration document and fi nancial report - BNP PARIBAS 67 CORPORATE GOVERNANCE 2 Statutory Auditors’ report, prepared in accordance with Article L.225-235 of the French Commercial Code on the report prepared by the Chairman of the Board of Directors
2.3 Statutory Auditors’ report, prepared in accordance with Article L.225-235 of the French Commercial Code on the report prepared by the Chairman of the Board 2 of Directors
Deloitte & Associés PricewaterhouseCoopers Audit Mazars 185, avenue Charles de Gaulle 63, rue de Villiers 61, rue Henri Regnault 92524 Neuilly-sur-Seine Cedex 92208 Neuilly-sur-Seine Cedex 92400 Courbevoie
This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
BNP Paribas 16 boulevard des Italiens 75009 Paris
To the Shareholders,
In our capacity as Statutory Auditors of BNP Paribas, and in accordance with Article L.225-235 of the French Commercial Code (Code de Commerce), we hereby report to you on the report prepared by the Chairman of your company in accordance with Article L.225-37 of the French Commercial Code for the year ended 31 December 2010. It is the Chairman’s responsibility to prepare, and submit to the Board of Directors for approval, a report describing the Internal Control and risk management procedures implemented by the Company and providing the other information required by Article L.225-37 of the French Commercial Code in particular relating to corporate governance. It is our responsibility:
■ to report to you on the information set out in the Chairman’s report on internal control and risk management procedures relating to the preparation and processing of fi nancial and accounting information; and ■ to attest that the report sets out the other information required by Article L.225-37 of the French Commercial Code, it being specifi ed that it is not our responsibility to assess the fairness of this information. We conducted our work in accordance with professional standards applicable in France.
Information concerning the Internal Control and risk management procedures relating to the preparation and processing of fi nancial and accounting information The professional standards require that we perform procedures to assess the fairness of the information on internal control and risk management procedures relating to the preparation and processing of fi nancial and accounting information set out in the Chairman’s report. These procedures mainly consisted of:
■ obtaining an understanding of the internal control and risk management procedures relating to the preparation and processing of fi nancial and accounting information on which the information presented in the Chairman’s report is based, and of the existing documentation; ■ obtaining an understanding of the work performed to support the information given in the report and of the existing documentation; ■ determining if any material weaknesses in the internal control procedures relating to the preparation and processing of fi nancial and accounting information that we may have identifi ed in the course of our work are properly described in the Chairman’s report. On the basis of our work, we have no matters to report on the information given on internal control and risk management procedures relating to the preparation and processing of fi nancial and accounting information, set out in the Chairman of the Board’s report, prepared in accordance with Article L.225-37 of the French Commercial Code.
68 2010 Registration document and fi nancial report - BNP PARIBAS CORPORATE GOVERNANCE Statutory Auditors’ report, prepared in accordance with Article L.225-235 2 of the French Commercial Code on the report prepared by the Chairman of the Board of Directors
Other information We attest that the Chairman’s report sets out the other information required by Article L.225-37 of the French Commercial Code.
Neuilly-sur-Seine and Courbevoie, 7 March 2011
The Statutory Auditors 2 Deloitte & Associés PricewaterhouseCoopers Audit Mazars Pascal Colin Patrice Morot Guillaume Potel
2010 Registration document and fi nancial report - BNP PARIBAS 69 CORPORATE GOVERNANCE 2 Executive Committee
2.4 Executive Committee
On 31 December 2010, the Executive Committee of BNP Paribas was composed of the following members:
■ Baudouin Prot, Director and Chief Executive Offi cer; 2 ■ Georges Chodron de Courcel, Chief Operating Offi cer; ■ Jean-Laurent Bonnafé, Chief Operating Offi cer; ■ Philippe Bordenave, Senior Executive Vice-President, Chief Financial Offi cer; ■ Jean Clamon, Managing Director, Head of Compliance and Internal Control Coordinator; ■ Jacques d’Estais, Head of Investment Solutions; ■ Fabio Gallia, Head of BNL bc; ■ Maxime Jadot, Head of BNP Paribas Fortis (1); ■ Michel Konczaty, Head of Group Risk Management; ■ Frédéric Lavenir, Head of Group Human Resources; ■ Alain Papiasse, Head of Corporate and Investment Banking; ■ François Villeroy de Galhau, Head of French Retail Banking. Since November 2007, the Executive Committee of BNP Paribas has been assisted by a permanent secretariat.
(1) Maxim Jadot has been a member of the BNP Paribas Executive Committee since March 1st 2011.
70 2010 Registration document and fi nancial report - BNP PARIBAS 3 2010 REVIEW OF OPERATIONS
3.1 BNP Paribas consolidated results 72 Net income attributable to equity holders of 7.8 billion euros, confi rming the robustness of BNP Paribas’ model 72 3.2 Core business results 73 Retail Banking 73 Investment solutions 78 Corporate and Investment Banking (CIB) 79 Corporate centre 81 3.3. Selected exposures based on Financial Stability Board recommendations 82 Exposure to conduits and SIVs 82 Sponsored ABCP conduits 83 Funding through proprietary securitisation 84 Sensitive loan portfolios 85 Real-estate related ABS and CDOs exposure 86 Monoline counterparty exposure 87 LBO 88 BNP Paribas Fortis “IN” portfolio 89 3.4. Balance sheet 90 Assets 90 Liabilities (excluding shareholders’ equity) 91 Consolidated shareholders’ equity attributable to the Group 92 Off-balance sheet items 93 3.5. Profi t and loss account 93 Revenues 93 Operating expenses, depreciation, and amortisation 96 Gross operating income 96 Cost of risk 96 Net income attributable to the Group 97 3.6. Recent events 98 Products and services 98 Acquisitions and partnerships 98 3.7. Outlook 99 Core businesses 99 High solvency, access to a wide variety of liquidity sources 100
2010 Registration document and fi nancial report - BNP PARIBAS 71 2010 REVIEW OF OPERATIONS 3 BNP Paribas consolidated results
3.1 BNP Paribas consolidated results
In millions of euros 2010 2009 2010/2009 Revenues 43,880 40,191 +9.2% Operating Expenses and Dep. (26,517) (23,340) +13.6% Gross Operating Income 17,363 16,851 +3.0% Cost of Risk (4,802) (8,369) -42.6% Operating Income 12,561 8,482 +48.1% Share of earnings of associates 268 178 +50.6% 3 Other Non Operating Items 191 340 -43.8% Non Operating Items 459 518 -11.4% Pre-Tax Income 13,020 9,000 +44.7% Corporate income tax (3,856) (2,526) +52.7% Net income attributable to minority interests (1,321) (642) n.s. Net income attributable to equity holders 7,843 5,832 +34.5% Cost/Income 60.4% 58.1% +2.3 pt
NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF 7.8 BILLION EUROS, CONFIRMING THE ROBUSTNESS OF BNP PARIBAS’ MODEL
Thanks to its active roll in fi nancing the economy and the successful The successful merger of BNP Paribas Fortis’ and BGL BNP Paribas’ integration of Fortis which takes the Group to a new dimension, entities with those of the Group thanks to the dedication of teams in BNP Paribas posted in 2010 net income (attributable to equity holders) all the territories and business units resulted in an increase in the of EUR 7,843 million, up 34.5% compared to 2009. synergies estimated for 2012 from EUR 900 million to EUR 1,200 million with the associated restructuring costs revised up from EUR 1.3 billion In 2010, the first full year in its new scope, the Group generated to EUR 1.65 billion. EUR 43,880 million in revenues, up 9.2% compared to 2009 (-0.1% at constant scope and exchange rates). Operating expenses totalled Return on equity was 12.3%, compared to 10.8% in 2009. EUR 26,517 million (+13.6%; +3.3% at constant scope and exchange Net earnings per share was EUR 6.3, up 21.7% compared to 2009. The rates). Gross operating income was therefore virtually stable at EUR net book value per share, at EUR 55.5, was up 9.0% compared to 2009. 17,363 million (+3.0%; -5.1% at constant scope and exchange rates). It was up 29.4% since 2006, the last year before the global economic Thanks to the sharp decline in the cost of risk (-42.6% at EUR 4,802 million; crisis: BNP Paribas’ model has generated robust growth in the book value -50.0% at constant scope and exchange rates) due to the improved throughout the cycle. economic environment, pre-tax income soared to EUR 13,020 million, up 44.7% (+36.5% at constant scope and exchange rates). Each of the The Board of Directors will propose to shareholders to pay a cash operating divisions grew its pre-tax income and strong rebound in Retail EUR 2.10 dividend, a 33.4% payout ratio. This allocation of earnings makes Banking helped rebalance their respective contributions. it possible to reinvest two-thirds of earnings back into the Company.
72 2010 Registration document and fi nancial report - BNP PARIBAS 2010 REVIEW OF OPERATIONS Core business results 3
Capital allocation Revenue from the capital allocated to each division is included in the division’s profit and loss account. The capital allocated to each division corresponds to the amount required to comply with European Solvency Ratio requirements under Basel II, and is based on 7% of risk-weighted assets. Risk-weighted assets are calculated as the sum of:
■ the risk-weighted assets for credit and counterparty risk, calculated using the standardised approach or the internal ratings based approach (IRBA) depending on the particular entity; ■ the regulatory capital requirement for market and operational risks, multiplied by 12.5. The capital requirement for operational risk is calculated using the basic indicator approach, standardised approach, or advanced measurement approach (AMA), depending on the particular entity. Each division is allocated the share of capital deducted prudentially from Tier 1 capital, which corresponds to 100% of the net asset value of investments in credit and financial institutions. The capital allocated to the Insurance business is equal to the solvency requirement calculated according to insurance regulations. 3
3.2 Core business results
RETAIL BANKING
In 2010, 56% of the divisions’ revenues came from the Retail Banking’s banking networks and specialised fi nancial services business units.
FRENCH RETAIL BANKING (FRB) In millions of euros 2010 2009 2010/2009 Revenues 6,877 6,541 +5.1% Incl. Net Interest Income 4,004 3,816 +4.9% Incl. Commissions 2,873 2,725 +5.4% Operating Expenses and Dep. (4,541) (4,367) +4.0% Gross Operating Income 2,336 2,174 +7.5% Cost of Risk (484) (518) -6.6% Operating Income 1,852 1,656 +11.8% Non Operating Items 1 1 +0.0% Pre-Tax Income 1,853 1,657 +11.8% Income Attributable to Investment Solutions (118) (102) +15.7% Pre-Tax Income of FRB 1,735 1,555 +11.6% Cost/Income 66.0% 66.8% -0.8 pt Allocated Equity (€bn) 5.8 5.6 +2.6% Including 100% of French Private Banking for Revenues to Pre-Tax Income line items
2010 Registration document and fi nancial report - BNP PARIBAS 73 2010 REVIEW OF OPERATIONS 3 Core business results
For the whole of 2010, the FRB teams were wholly dedicated to Thanks to a good sales and marketing drive, revenues (1) reached enhancing the service offering and making full use of the expertise of EUR 6,877 million. At constant scope, it rose 3.6%: net interest income all the Group’s business units in supporting their clients—individuals, growth (+3.3%) was driven by the increase in volumes and a favourable small businesses and corporates—in their projects. This dedication is trend in the structure of deposits; fees were up (+4.0%) due to gains of illustrated by growth in outstanding loans (+3.6% (*) vs. 2009), driven by individuals customers with a total of 190,000 net new current accounts strong growth in mortgages (+8.1% (*)) against a backdrop of very low opened and despite households’ continued aversion to fi nancial markets. interest rates. Although corporate demand remained very low on the A moderate rise in operating expenses (1) (+2.2% (*)) to EUR 4,541 million whole (outstandings: -1.5% (*) vs. 2009), the success of initiatives targeting helped the division generate a 1.4 point (*) jaws effect, outperforming small businesses, VSEs and SMEs helped jumpstart their demand for the target set for 2010. The cost/income ratio improved a further 0.9 loans at the end of the year (+3.5% vs. 31 December 2009). point (*) at 66.0%. This solid operating performance helped push up gross Deposits rose 1.9% (*) on average compared to 2009 benefi ting from a operating income (1) 6.3% (*) to EUR 2,336 million. The cost of risk (2)., at favourable structural effect with strong sight deposit growth (+9.5% (*)). 35bp of outstanding customer loans, started to decline compared to The end of the year was marked by the beginning of a re-intermediation 2009 (41bp). of money market mutual funds to savings accounts and term deposits. After allocating one-third of French Private Banking’s net income 3 Asset inflows into life insurance rose a further 8.5% compared to to the Investment Solutions division, FRB’s pre-tax income came to 31 December 2009 despite extremely low interest rates. EUR 1,735 million, up sharply by 11.6% over 2009.
BNL BANCA COMMERCIALE (BNL BC) In millions of euros 2010 2009 2010/2009 Revenues 3,060 3,003 +1.9% Operating Expenses and Dep. (1,798) (1,801) -0.2% Gross Operating Income 1,262 1,202 +5.0% Cost of Risk (817) (671) +21.8% Operating Income 445 531 -16.2% Non Operating Items (2) 0 n.s. Pre-Tax Income 443 531 -16.6% Income Attributable to Investment Solutions (11) (7) +57.1% Pre-Tax Income of BNL bc 432 524 -17.6% Cost/Income 58.8% 60.0% -1.2 pt Allocated Equity (€bn) 4.8 4.6 +4.2% Including 100% of Italian private banking for Revenues to Pre-tax Income line items
For the whole of 2010, amidst a slow recovery of the Italian economy, BNL fees (+8.5% (*)) thanks to the signifi cant expansion of cross-selling both bc continued to implement its action plan to improve the product offering in terms of fi nancial savings and fl ow products. However, net interest and to expand cross-selling with Investment Solutions (fi nancial savings) income fell (-2.0% (*)) due to eroding loan margins and a moderate rise and CIB (cash management, international trade fi nance and structured in volumes. fi nance). Weak growth in loans (+0.3% (*) ) was due to an increase in While 54 new branches were opened in 2010 and the branch renovation (*) investment loans to corporates (+1.0% ) whilst the trend in lending and network restructuring programme was almost completed, operating to individuals (-0.5% (*)) was affected by steadfast efforts to maintain expenses (2) dipped 0.7% (*) thanks, in particular, to the impact of synergies margins in a context of demand for mortgage terms renegotiation. derived from the integration of Banca UCB and Fortis. This good operating Deposits rose 2.7% (*). Financial saving continued to grow thanks to the performance translated into a further 1.3pt (*) improvement of the cost/ renewal of the offering, both in life insurance and mutual funds. income ratio at 58.8% and helped BNL bc produce a positive 2.2pt (*) jaws At EUR 3,060 million, revenues (2) edged up 1.9% compared to 2009 effect. Gross operating income (2), which totalled EUR 1,262 million, was (+1.5% at constant scope). They held up well due to strong growth in up 4.8% (*) compared to 2009.
(*) At constant scope and exchange rates. (1) Excluding PEL/CEL effects, with 100% of French Private Banking. (2) With 100% of Italian Private Banking.
74 2010 Registration document and fi nancial report - BNP PARIBAS 2010 REVIEW OF OPERATIONS Core business results 3
The Italian economic environment again weighed on the cost of risk (1), Thus, after allocating one-third of Italian Private Banking’s net income which, at EUR 817 million, was up 21.1% at 107bp compared to 91bp in to the Investment Solutions division, BNL bc’s pre-tax income came to 2009. It nevertheless stabilised around this level for the whole of 2010. EUR 432 million, down 17.2% (*) compared to 2009.
BELUX RETAIL BANKING (BELUX RB) In millions of euros 2010 2009 (1) 2010/2009 (2) Revenues 3,377 3,174 +6.6% Operating Expenses and Dep. (2,409) (2,352) +2.5% Gross Operating Income 968 822 +18.1% Cost of Risk (219) (451) -51.4% Operating Income 749 371 n.s. Non Operating Items 3 (3) n.s. 3 Pre-Tax Income 752 368 n.s. Income Attributable to Investment Solutions (64) (53) +22.0% Pre-Tax Income of BeLux Retail Banking 688 315 n.s. Cost/Income 71.3% 74.1% -2.8 pt Allocated Equity (€bn) 2.8 3.1 -11.8% Including 100% of Belgian private banking for Revenues to Pre-tax Income line items (1) Pro forma. (2) At constant scope.
For the whole of 2010, BeLux Retail Banking, the new retail banking entity Revenues (2) totalled EUR 3,377 million, up 6.6% (*) compared to 2009, in Belgium and Luxembourg, pursued its sales and marketing drive and driven by growth in volumes and margins holding up well. reaped the benefi ts of its restored franchise. It also continued on-going Thanks to the optimisation of costs as a result of the implementation efforts to improve customer satisfaction and to increase cross-selling of the business plan, the rise in operating expenses (2) was limited to with CIB to corporates and the public sector, in particular with respect 2.5% (*) compared to 2009 and helped BeLux Retail Banking generate to syndicated loans, bond issues and acquisition fi nance. EUR 968 million in gross operating income (2), up 18.1% (*) for the period. Outstanding loans grew by 2.2% (*) compared to 2009, driven by fast- The positive 4.1pt jaws effect was better than the target set for the 2010. paced growth in mortgages in Belgium and Luxembourg and the upswing The 71.3% cost/income ratio improved 2.8pts (*) during the period. in demand from small businesses whilst demand from corporates, who The EUR 219 million cost of risk (2), or 27bp of outstanding customer prefer financing on capital markets, remained limited. Outstanding loans, was cut in half (*) compared to 2009 reaching a moderate level. deposits, at EUR 97.8 billion, jumped (+11.4% (*)) with good asset infl ows into sight deposits (+7.5% (*)) and into savings accounts and out of term After allocating one-third of Belgian Private Banking’s net income to the deposits. Belgian Private Banking’s assets under management rose 13.2% Investment Solutions division, BeLux Retail Banking’s pre-tax income (*) compared to 2009. came to EUR 688 million. It was double the 2009 level.
(1) With 100% of Italian Private Banking. (2) With 100% of Belgian Private Banking. (*) At constant scope and exchange rates.
2010 Registration document and fi nancial report - BNP PARIBAS 75 2010 REVIEW OF OPERATIONS 3 Core business results
EUROPE MEDITERRANEE In millions of euros 2010 2009 2010/2009 Revenues 1,878 1,847 +1.7% Operating Expenses and Dep. (1,401) (1,194) +17.3% Gross Operating Income 477 653 -27.0% Cost of Risk (392) (869) -54.9% Operating Income 85 (216) n.s. Share of Earnings of Associates 20 12 +66.7% Other Non Operating Items (1) 0 n.s. Pre-Tax Income 104 (204) n.s. Cost/Income 74.6% 64.6% +10.0 pt 3 Allocated Equity (€bn) 2.8 2.9 -1.1%
For the whole of 2010, Europe-Mediterranean continued to reengineer Operating expenses rose 3.3% (*) to EUR 1,401 million. the business operations in Ukraine and to gain new customers in other The cost of risk was down sharply to 149bp compared to 355bp in 2009 (*) countries (+600,000 in total). Outstanding loans grew on average 2.6% with an improvement in all the leading countries, especially in Ukraine. excluding Ukraine compared to 2009. The international trade fi nance Thus, in keeping with its target, Europe-Mediterranean returned to a and corporate cash management businesses are growing successfully. break-even point: pre-tax income totalled EUR +104 million compared Revenues totalled EUR 1,878 million. The slight drop (-2.9% (*)) compared to EUR -204 million in 2009. to 2009 is due to the combination of signifi cant contraction in Ukraine (-24.8% (*)) and 1.8% (*) growth excluding Ukraine.
BANCWEST In millions of euros 2010 2009 2010/2009 Revenues 2,284 2,162 +5.6% Operating Expenses and Dep. (1,250) (1,167) +7.1% Gross Operating Income 1,034 995 +3.9% Cost of Risk (465) (1,195) -61.1% Operating Income 569 (200) n.s. Share of Earnings of Associates 0 0 n.s. Other Non Operating Items 4 3 +33.3% Pre-Tax Income 573 (197) n.s. Cost/Income 54.7% 54.0% +0.7 pt Allocated Equity (€bn) 3.2 3.2 -1.2%
For the whole of 2010, BancWest managed to grow its core deposits Gross operating income therefore came to EUR 1,034 million (+3.9%; signifi cantly and on a regular basis, on average 9.7% compared to 2009. If -0.7% at constant exchange rates). one adds to that less frequent and more costly jumbo CDs, deposits grew The cost of risk benefi ted from a more favourable economic environment (*) (*) on aggregate by 2.9% . Loans were down 4.4% on average compared to and the improved quality of the portfolios. It fell from 310bp in 2009 to 2009 but at the end of the year the improved economy and an upswing in 119bp in 2010. The property related Asset Backed Securities portfolio marketing spending resulted in a pickup in consumer loans and corporate was brought down to a very small amount (EUR 78 million as at loans. Net interest margin expanded on average 15bp. 31 December 2010 compared to EUR 759 million as at 31 December 2009). Against this backdrop, revenues were up 5.6% compared to 2009 to The average non-accruing loan ratio was fairly stable since the last EUR 2,284 million (+1.0% at constant scope; the dollar appreciated in quarter 2009 (3.01%) and even started to fall in the fourth quarter 2010 value relative to the euro by an average 5%). (2.96%). Operating expenses were up 7.1% (+2.4% at constant exchange rates). Thus, the pre-tax income came to EUR 573 million compared to a loss The cost/income ratio edged up from 54% to 54.7% and remained very of EUR 197 million in 2009. competitive.
(*) At constant scope and exchange rates.
76 2010 Registration document and fi nancial report - BNP PARIBAS 2010 REVIEW OF OPERATIONS Core business results 3
PERSONAL FINANCE In millions of euros 2010 2009 2010/2009 Revenues 5,050 4,340 +16.4% Operating Expenses and Dep. (2,324) (2,068) +12.4% Gross Operating Income 2,726 2,272 +20.0% Cost of Risk (1,921) (1,938) -0.9% Operating Income 805 334 n.s. Share of Earnings of Associates 77 61 +26.2% Other Non Operating Items 11 31 -64.5% Pre-Tax Income 893 426 n.s. Cost/Income 46.0% 47.6% -1.6 pt Allocated Equity (€bn) 3.9 3.5 +10.0% 3
For the whole of 2010, in a changing business and regulatory environment, Operating expenses rose 3.0% (*) and helped generate gross operating Personal Finance continued its efforts initiated in 2009 to adapt its income up 7.1% (*) at EUR 2,726 million as well as a positive 2.1pt (*) jaws business model as well as its growth and industrialisation strategy: it effect in line with the target set for 2010. The cost/income ratio, at 46.0%, formed a partnership with Commerzbank giving it access to a network of improved a further 1pt (*). 1,200 branches and 11 million customers in Germany; in France, it forged The cost of risk, at EUR 1,921 million (or 232bp of outstandings), started a partnership with BPCE to create a common consumer loan management to drop in most countries and was down 11.3% (*) overall. IT platform; it implemented the Findomestic integration plan in Italy. The pre-tax income totalled EUR 893 million, nearly twice the 2009 level. Personal Finance’s revenues, which totalled EUR 5,050 million, were up 16.4% compared to 2009. At constant scope and exchange rates, they grew 5.1% due to the rise in outstandings (+4.0% (*)) driven by origination growth, in particular in France, Italy, Germany, Brazil and Turkey with a low risk profi le and good profi tability.
EQUIPMENT SOLUTIONS In millions of euros 2010 2009 2010/2009 Revenues 1,506 1,200 +25.5% Operating Expenses and Dep. (807) (740) +9.1% Gross Operating Income 699 460 +52.0% Cost of Risk (283) (307) -7.8% Operating Income 416 153 n.s. Share of Earnings of Associates (10) (3) n.s. Other Non Operating Items 1 (2) n.s. Pre-Tax Income 407 148 n.s. Cost/Income 53.6% 61.7% -8.1 pt Allocated Equity (€bn) 2.1 2.0 +4.0%
For the whole of 2010, Equipment Solutions’ revenues, at EUR 1,506 million, with control of operating expenses (+3.8% (*)) helped the business unit soared compared to 2009 (+25.5%). At constant scope and exchange rates, generate major gross operating income growth (+36.8% (*)). This operating they grew 16.9% thanks to a rebound in used vehicle prices and the performance combined with a sharp drop in the cost of risk (-22.0% (*)) expansion of the fi nanced automobile fl eet (+4.0%) and the fact that the helped Equipment Solutions generate EUR 407 million in pre-tax income, leasing businesses held up well. This good boost to business combined more than three times* the 2009 level.
(*) At constant scope and exchange rates.
2010 Registration document and fi nancial report - BNP PARIBAS 77 2010 REVIEW OF OPERATIONS 3 Core business results
INVESTMENT SOLUTIONS
In millions of euros 2010 2009 2010/2009 Revenues 6,163 5,363 +14.9% Operating Expenses and Dep. (4,365) (3,835) +13.8% Gross Operating Income 1,798 1,528 +17.7% Cost of Risk 16 (41) n.s. Operating Income 1,814 1,487 +22.0% Share of Earnings of Associates 106 11 n.s. Other Non Operating Items 62 (35) n.s. Pre-Tax Income 1,982 1,463 +35.5% 3 Cost/Income 70.8% 71.5% -0.7 pt Allocated Equity (€bn) 6.4 5.9 +8.9%
For the whole of 2010, Investment Solutions’ net asset outfl ows totalled good business drive in the second half of the year, the growth in assets EUR 3.3 billion: good asset infl ows in Insurance (EUR +8.4 billion), Private under custody and under administration more than offsetting the decline Banking (EUR +3.2 billion despite a challenging environment) and Personal in the volume of transactions. Investors (EUR +1.4 billion) only partly offset the EUR 17.6 billion in asset Operating expenses, at EUR 4,365 million, were up 3.7% (*) due to outfl ows in asset management, primarily due to money market funds continued investments to support business development, in particular (EUR -12.7 billion). Combined with positive performance and foreign in the Insurance and Securities Services business units. exchange effects, this asset movement nevertheless pushed managed assets (1) up 7.5%, compared to 31 December 2009, to EUR 901 billion. After receiving one-third of the income from private banking in the domestic markets, pre-tax income, which was EUR 1,982 million, soared At EUR 6,163 million, revenues were up 14.9% compared to 2009. At 28.5% (*). The good operating performance of all the business units was constant scope and exchange rates, they grew 6.8% driven by a rise supplemented by a signifi cant contribution from the equity affi liates in in assets under management, by the fact that the private banking and insurance and by the sell-off of certain businesses as part of an effort to asset management businesses held up well despite individual customers’ streamline the organisation. aversion to risk, by a sharp rise in gross written premiums in Insurance in France (+8.4%) and outside France (+13.5%) and by Securities Services’
WEALTH AND ASSET MANAGEMENT In millions of euros 2010 2009 2010/2009 Revenues 3,384 2,935 +15.3% Operating Expenses and Dep. (2,477) (2,155) +14.9% Gross Operating Income 907 780 +16.3% Cost of Risk 19 (52) n.s. Operating Income 926 728 +27.2% Share of Earnings of Associates 29 (4) n.s. Other Non Operating Items 41 (10) n.s. Pre-Tax Income 996 714 +39.5% Cost/Income 73.2% 73.4% -0.2 pt Allocated Equity (€bn) 1.5 1.5 -4.0%
(*) At constant scope and exchange rates. (1) Assets under management and advisory for outside clients.
78 2010 Registration document and fi nancial report - BNP PARIBAS 2010 REVIEW OF OPERATIONS Core business results 3
INSURANCE In millions of euros 2010 2009 2010/2009 Revenues 1,571 1,282 +22.5% Operating Expenses and Dep. (855) (725) +17.9% Gross Operating Income 716 557 +28.5% Cost of Risk (3) 8 n.s. Operating Income 713 565 +26.2% Share of Earnings of Associates 80 13 n.s. Other Non Operating Items 21 (25) n.s. Pre-Tax Income 814 553 +47.2% Cost/Income 54.4% 56.6% -2.2 pt 3 Allocated Equity (€bn) 4.6 4.0 +15.1%
SECURITIES SERVICES In millions of euros 2010 2009 2010/2009 Revenues 1,208 1,146 +5.4% Operating Expenses and Dep. (1,033) (955) +8.2% Gross Operating Income 175 191 -8.4% Cost of Risk 0 3 n.s. Operating Income 175 194 -9.8% Other Non Operating Items (3) 2 n.s. Pre-Tax Income 172 196 -12.2% Cost/Income 85.5% 83.3% +2.2 pt Allocated Equity (€bn) 0.3 0.3 -6.8%
CORPORATE AND INVESTMENT BANKING (CIB)
In millions of euros 2010 2009 2010/2009 Revenues 11,998 13,497 -11.1% Operating Expenses and Dep. (6,442) (6,174) +4.3% Gross Operating Income 5,556 7,323 -24.1% Cost of Risk (314) (2,473) -87.3% Operating Income 5,242 4,850 +8.1% Share of Earnings of Associates 44 21 n.s. Other Non Operating Items 19 (5) n.s. Pre-Tax Income 5,305 4,866 +9.0% Cost/Income 53.7% 45.7% +8.0 pt Allocated Equity (€bn) 13.9 15.1 -8.2%
For the whole of 2010, CIB’s revenues totalled EUR 11,998 million, down fell 18.8% compared to the exceptionally high base in 2009 and were the 11.1% compared to 2009. At constant scope and exchange rates, they result of a balanced contribution between the business units.
2010 Registration document and fi nancial report - BNP PARIBAS 79 2010 REVIEW OF OPERATIONS 3 Core business results
The division’s operating expenses, at EUR 6,442 million, were down This performance showed again this year the superior quality of the CIB 4.5% (*) compared to 2009, despite the bolstering of the organisations franchise, the robustness of a diversifi ed customer-driven model as well in Asia and in the United States, in particular for Fixed Income and as its ability to withstand major market shocks such as the sovereign debt Structured Finance. crisis. The level of market risks remained low relative to peers and the operating effi ciency is the best in the industry. The fi nancing businesses The cost/income ratio was 53.7%, still the best in the banking industry. contributed 50% to pre-tax income, comparable to pre-crisis levels. The division’s cost of risk, at EUR 314 million, was down sharply compared This performance was achieved all the while reducing allocated equity to 2009 (EUR 2,473 million). The decline was particularly signifi cant for by 8.2% compared to 2009, in particular for Capital Market businesses the fi nancing businesses, the cost of risk of which, 98bp in 2009, was (14.7% reduction). down to zero in 2010, new provisions being offset by write-backs due to the improving economy. CIB’s pre-tax income was EUR 5,305 million, up 2.5% (*) despite a less favourable market than in 2009.
3 ADVISORY AND CAPITAL MARKETS In millions of euros 2010 2009 2010/2009 Revenues 7,630 9,921 -23.1% Incl. Equity and Advisory 2,222 1,920 +15.7%. Incl. Fixed Income 5,408 8,001 -32.4%. Operating Expenses and Dep. (4,760) (4,747) +0.3% Gross Operating Income 2,870 5,174 -44.5% Cost of Risk (307) (940) -67.3% Operating Income 2,563 4,234 -39.5% Share of Earnings of Associates 1 1 +0.0% Other Non Operating Items 13 (3) n.s. Pre-Tax Income 2,577 4,232 -39.1% Cost/Income 62.4% 47.8% +14.6 pt Allocated Equity (€bn) 5.8 6.8 -14.7%
Capital Markets’ revenues, which totalled EUR 7,630 million, were down volatile market environment also favoured sustained business in forex 30.7% (*) compared to the especially high level in 2009, the fi rst half of and fi xed income derivative products. which was exceptional for Fixed Income businesses. Equities and Advisory’s revenues, which totalled EUR 2,222 million, were Fixed Income’s revenues stood at EUR 5,408 million compared to up 15.7% compared to 2009 despite the high cost of hedging customer 8,001 million in 2009. Despite a challenging market environment due positions in the second quarter of the year against a backdrop of feverish to investors’ concerns over the sovereign debt of certain European markets. Business gradually rebounded, thanks in particular to taylor- countries, which resulted in the contraction of primary markets twice, made solutions for major European clients, the success of structured the customer business was sustained and the business unit strengthened products designed to limit volatility risks for institutional investors and its positions in all segments, in particular with institutional clients. It the successful launch of capital-guaranteed structured products indexed thereby consolidated its number 1 position in euro-denominated bond to proprietary indices marketed through banking and insurance networks issues, enabling clients to fi nance their projects by raising funds on inside or outside the Group. capital markets. Corporations substantial needs to hedge risks in a
(*) At constant scope and exchange rates.
80 2010 Registration document and fi nancial report - BNP PARIBAS 2010 REVIEW OF OPERATIONS Core business results 3
FINANCING BUSINESSES In millions of euros 2010 2009 2010/2009 Revenues 4,368 3,576 +22.1% Operating Expenses and Dep. (1,682) (1,427) +17.9% Gross Operating Income 2,686 2,149 +25.0% Cost of Risk (7) (1,533) -99.5% Operating Income 2,679 616 n.s. Non Operating Items 49 18 n.s. Pre-Tax Income 2,728 634 n.s. Cost/Income 38.5% 39.9% -1.4 pt Allocated Equity (€bn) 8.1 8.3 -2.9% 3 Revenues from the fi nancing businesses came to EUR 4,368 million, positions as a global leader in certain of its businesses helped the up sharply compared to 2009 (+16.3% (*)), driven by good business in Group make a signifi cant contribution to fi nancing the economy on all structured finance, especially energy and commodities finance. Its the continents.
CORPORATE CENTRE
In millions of euros 2010 2009 Revenues 2,116 629 Operating Expenses and Dep. (1,391) (689) Incl. restructuring costs (780) (173) Gross Operating Income 725 (60) Cost of Risk 78 (8) Operating Income 803 (68) Share of Earnings of Associates 31 74 Non Operating Items 92 353 Pre-Tax Income 926 359
For the whole of 2010, the Corporate Centre’s revenues totalled Operating expenses came to EUR 611 million, excluding restructuring EUR 2,116 million compared to EUR 629 million in 2009-a year marked costs, compared to EUR 516 million in 2009. The variation comes by a total of EUR -1,050 million in exceptional negative items (own debt, primarily from new one-off contributions to deposit insurance funds that impairment charges on investments). In 2010, the exceptional impairment French and Belgian banks are required to pay. charge to the AXA investment (EUR -534 million) was more than offset Restructuring costs grew by EUR 173 to 780 million between 2009 and by exceptional PPA (Purchase Price Accounting) fair value adjustments 2010. They are expected to be about EUR 600 million euros in 2011. associated with the acquisition of Fortis (EUR +630 million for the whole year) whilst the revaluation of the own debt had a net positive result Corporate Centre’s pre-tax income totalled EUR 926 million compared (EUR +95 million) against a general backdrop of widening spreads. to EUR 359 million in 2009.
(*) At constant scope and exchange rates.
2010 Registration document and fi nancial report - BNP PARIBAS 81 2010 REVIEW OF OPERATIONS 3 Selected exposures based on Financial Stability Board recommendations
3.3 Selected exposures based on Financial Stability Board recommendations
EXPOSURE TO CONDUITS AND SIVs
Entity data BNP Paribas exposure Liquidity lines ABCP As at 31 December 2010 Assets Securities Line o/w cash Credit heldand Maximum 3 In billions of euros funded issued outstanding drawn enhancement (1) others commitment (2) BNP Paribas sponsored entities ABCP conduits 6.6 6.7 6.7 - 0.4 0.4 9.5 Structured Investment Vehicles ------Third party sponsored entities (BNP Paribas share) ABCP conduits 0.5 0.5 0.5 - - - 0.5 Structured Investment Vehicles ------(1) Provided by BNP Paribas. In addition, each programme benefi ts from other types of credit enhancement. (2) Represent the cumulative exposure across all types of commitments in a worst case scenario.
At 31 December 2010, exposures declined to EUR 9.5 billion, down The Group does not have any exposure to SIVs. EUR 1.5 billion compared to 31 December 2009, owing principally to repayments of facilities.
82 2010 Registration document and fi nancial report - BNP PARIBAS 2010 REVIEW OF OPERATIONS Selected exposures based on Financial Stability Board recommendations 3
SPONSORED ABCP CONDUITS
➤ BREAKDOWN BY MATURITY AND GEOGRAPHY
Sponsored ABCP conduits as at 31 December 2010 Starbird Matchpoint Eliopee Thesee J Bird 1 & 2 In billions of euros United States Europe Europe Europe Japan Total Ratings A1 / P1 A1+ / P1 P1 A1 / P1 / F1 A1 / P1 3 BNP Paribas commitments 4.3 3.8 0.9 0.4 0.2 9.5 Assets funded 2.2 3.2 0.7 0.3 0.2 6.6 Breakdown by maturity 0 - 1 year 40% 22% 8% 77% 30% 32% 1 year - 3 years 40% 45% 67% - 46% 43% 3 years - 5 years 14% 17% 25% 23% 22% 17% > 5 years 6% 16% 0% 0% 2% 8% TOTAL 100% 100% 100% 100% 100% 100% Breakdown by geography (*) USA 91%2%---31% France - 20% 93% 100% - 25% Spain - 10% - - - 5% Italy - 7%---4% UK -9%---4% Asia - 17% - - 100% 11% Diversifi ed and Others 9% 35% 7% - - 20% TOTAL 100% 100% 100% 100% 100% 100% (*) Convention used is: when a pool contains more than 50% country exposure, this country is considered to be the one of the entire pool. Any pool where one country does not reach this level is considered as diversifi ed.
2010 Registration document and fi nancial report - BNP PARIBAS 83 2010 REVIEW OF OPERATIONS 3 Selected exposures based on Financial Stability Board recommendations
➤ BREAKDOWN BY ASSET TYPE
Total Starbird Sponsored ABCP conduits United Matchpoint Eliopee Thesee J Bird 1 & 2 by asset o/w AA as at 31 December 2010 States Europe Europe Europe Japan type and above Breakdown by asset type Auto Loans, Leases & Dealer Floorplans 37% 21% - - - 25% Trade Receivables 27% 30% 100% 100% - 37% Consumer Loans & Credit Cards 4% 9% - - 100% 8% Equipment Finance 8% - - - - 4% Student Loans RMBS - 4% - - - 1% 100% 3 o/w US (0% subprime) - 1% - - - 0% 100% o/w UK o/w Spain - 2% - - - 1% 100% CMBS - 15% - - - 6% 36% o/w US, UK, Spain CDOs of RMBS (non US) - 7% - - - 3% - CLOs 16% 8% - - - 10% 47% CDOs of corporate bonds Insurance Others 8% 6% - - - 6% 34% TOTAL 100% 100% 100% 100% 100% 100%
FUNDING THROUGH PROPRIETARY SECURITISATION
Securitised positions held Cash securitisation as at 31 December 2010 Amount of In billions of euros securitised assets Amount of notes First losses Others Personal Finance 3.5 3.9 0.1 1.7 o/w Residential loans 3.0 3.4 0.1 1.6 o/w Consumer loans 0.1 0.0 0.0 - o/w Lease receivables 0.4 0.4 0.0 0.1 BNL 3.2 3.1 0.1 0.2 o/w Residential loans 3.2 3.1 0.1 0.2 o/w Consumer loans - - - - o/w Lease receivables - - - - o/w Public sector - - - - TOTAL 6.7 7.0 0.2 1.9
EUR 6.7 billion of loans had been refi nanced through securitisation at Following the transition to IFRS in 2005, SPVs are consolidated in the 31 December 2010, compared to EUR 8.0 billion at 31 December 2009. BNP Paribas balance sheet whenever the Bank holds the majority of the corresponding risks and returns. EUR 1.9 billion of senior securitised positions were held at the end of 2010, including EUR 0.4 billion of senior bond bought back in 2010 from some UCI funds (Residential loan securitisation).
84 2010 Registration document and fi nancial report - BNP PARIBAS 2010 REVIEW OF OPERATIONS Selected exposures based on Financial Stability Board recommendations 3
SENSITIVE LOAN PORTFOLIOS
➤ PERSONAL LOANS
Gross outstanding Allowances Personal loans First Mortgage as at 31 December 2010 Home Equity Net In billions of euros Consumer Full Doc Alt A Loans Total Portfolio Specifi c exposure US 8.6 7.4 0.3 3.0 19.2 (0.3) (0.1) 18.8 Super Prime FICO (*) > 730 5.6 4.7 0.2 1.9 12.4 12.4 Prime 600 < FICO (*) < 730 2.4 2.2 0.1 0.9 5.7 5.7 Subprime FICO (*) < 600 0.5 0.4 0.0 0.2 1.1 1.1 UK 0.6 0.4 - - 1.0 (0.0) (0.1) 0.9 3 Spain 3.8 6.0 - - 9.9 (0.1) (0.9) 8.8 (*) At origination.
The Group’s personal loans classifi ed as sensitive included the following ■ moderate exposure to the UK market (EUR 1.0 billion); at 31 December 2010: ■ well-secured exposure to risks in Spain through guarantees in the ■ the good quality of the US portfolio, which represented gross mortgage portfolio and a sizeable percentage of auto loans in the exposure of EUR 19.2 billion, up EUR 0.8 billion compared with consumer loan portfolio. 31 December 2009. The consumer loan portfolio quality is improving;
➤ COMMERCIAL REAL ESTATE
Gross exposure Allowances Commercial Real Estate Non as at 31 December 2010 Home residential Property Net In billions of euros Builders developers companies Others (1) Total Portfolio Specifi c exposure US 0.6 0.9 0.5 4.7 6.7 (0.1) (0.1) 6.6 BancWest 0.6 0.8 - 4.7 6.1 (0.1) (0.0) 6.0 CIB 0.0 0.1 0.5 - 0.6 (0.0) (0.0) 0.6 UK 0.1 0.3 1.8 0.4 2.7 (0.0) (0.1) 2.6 Spain - 0.0 0.5 0.6 1.1 (0.0) (0.0) 1.1 (1) Excluding owner-occupied and real estate backed loans to corporates.
The Group’s commercial real estate loan portfolio included the following ■ exposure to the UK concentrated on the major property companies and at 31 December 2010: down EUR 0.4 billion compared with 31 December 2009;
■ diversifi ed and granular exposure to the US, including an exposure to ■ limited exposure to commercial real estate risk in Spain due in the home builder sector which has been signifi cantly reduced (down particular to the good quality of the commercial mortgage loan EUR 0.7 billion compared with 31 December 2009) and an exposure of portfolio. EUR 4.7 billion to the other sectors of commercial real estate (up EUR 0.7 billion compared with 31 December 2009) corresponding to very granular and well diversifi ed fi nancing of smaller property companies on a secured basis (mainly offi ce, retail and residential multifamily property type);
2010 Registration document and fi nancial report - BNP PARIBAS 85 2010 REVIEW OF OPERATIONS 3 Selected exposures based on Financial Stability Board recommendations
REAL-ESTATE RELATED ABS AND CDOs EXPOSURE
➤ BANKING BOOK AND TRADING PORTFOLIO
31.12.2009 31.12.2010 Net exposure In billions of euros Net exposure Gross exposure (1) Allowances Net exposure TOTAL RMBS 11.8 10.6 (0.1) 10.4 US 1.4 0.4 (0.1) 0.3 Subprime 0.1 0.1 (0.0) 0.1 Mid-prime 0.1 0.0 (0.0) 0.0 Alt-A 0.1 0.0 (0.0) 0.0 3 Prime (2) 1.1 0.2 (0.0) 0.2 UK 1.0 0.9 (0.1) 0.8 Conforming 0.2 0.2 - 0.2 Non conforming 0.8 0.7 (0.1) 0.6 Spain 0.9 0.8 (0.0) 0.8 The Netherlands 8.2 8.2 (0.0) 8.2 Other countries 0.4 0.4 - 0.4 TOTAL CMBS 2.2 2.3 (0.0) 2.3 US 1.2 1.3 (0.0) 1.3 Non US 1.0 1.0 (0.0) 1.0 TOTAL CDOs (CASH AND SYNTHETIC) 0.7 0.8 (0.0) 0.8 RMBS 0.6 0.7 (0.0) 0.7 US 0.0 0.2 (0.0) 0.2 Non US 0.6 0.6 (0.0) 0.6 CMBS 0.0 0.0 (0.0) 0.0 CDO of TRUPs 0.1 0.1 - 0.1 TOTAL 14.8 13.7 (0.2) 13.5 o/w Trading Book 0.0 - - 0.2 TOTAL SUBPRIME, ALT-A, US CMBS AND RELATED CDOS 1.5 1.6 (0.1) 1.5 (1) Entry price + accrued interests – amortisation. (2) Excluding Governement Sponsored Entity backed Securities.
The banking book’s exposure to real estate related ABSs and CDOs The assets are booked at amortised cost with the appropriate provision decreased by EUR 1.5 billion due to sales of Prime US RMBS. The quality whenever there is a permanent impairment. of the portfolio remains high, with 74% of assets rated AAA. The trading book’s exposure to real estate ABSs and CDOs was negligible.
86 2010 Registration document and fi nancial report - BNP PARIBAS 2010 REVIEW OF OPERATIONS Selected exposures based on Financial Stability Board recommendations 3
MONOLINE COUNTERPARTY EXPOSURE
31.12.2009 31.12.2010 Gross Gross counterparty counterparty In billions of euros Notional exposure Notional exposure CDOs of US RMBS subprime 1.56 1.30 0.68 0.58 CDOs of european RMBS 0.27 0.14 0.26 0.04 CDOs of CMBS 1.04 0.24 1.12 0.26 CDOs of corporate bonds 7.32 0.21 7.81 0.18 CLOs 5.07 0.17 5.05 0.17 Non credit related n.s 0.00 n.s 0.00 3 TOTAL GROSS COUNTERPARTY EXPOSURE N.S 2.06 N.S 1.23
In billions of euros 31.12.2009 31.12.2010 TOTAL GROSS COUNTERPARTY EXPOSURE 2.06 1.23 Credit derivatives bought from banks or other collateralized third parties (0.38) (0.22) TOTAL UNHEDGED GROSS COUNTERPARTY EXPOSURE 1.68 1.01 Credit adjustments and allowances (1) (1.39) (0.86) NET COUNTERPARTY EXPOSURE 0.30 0.16 (1) Including specifi c allowances as at 31 December 2010 of €0.4bn related to monolines classifi ed as doubtful.
At 31 December 2010, gross exposure to counterparty risk stood at EUR 1.23 billion, down EUR 0.83 billion compared with 31 December 2009, as a result of commutations during 2010 with no signifi cant impact on the profi t and loss.
2010 Registration document and fi nancial report - BNP PARIBAS 87 2010 REVIEW OF OPERATIONS 3 Selected exposures based on Financial Stability Board recommendations
LBO
Final take by region Asia 4% USA 13% Other Europe 25% UK 5% Italy 8% France 45% TOTAL 100%
3 Final take by sector Business services 21% Materials & ores 10% Communication 8% Media 8% Retail trade 6% Agriculture, food,… 6% Healthcare & pharma 6% Building & public works 5% Others (< 5%) 30% TOTAL 100%
The Group’s LBP final take portfolio totalled EUR 9.4 billion at consists of senior debt. This portfolio is booked as loans and receivables 31 December 2010, down EUR 1.3 billion compared with 31 December 2009. at amortised cost. Allowances total EUR 0.9 billion. This portfolio is highly diversifi ed (over 450 transactions) and 93% of it The trading book’s exposure is negligible.
88 2010 Registration document and fi nancial report - BNP PARIBAS 2010 REVIEW OF OPERATIONS Selected exposures based on Financial Stability Board recommendations 3
BNP PARIBAS FORTIS “IN” PORTFOLIO (1)
31.12.2009 31.12.2010 Net exposure In billions of euros Net exposure Gross exposure (1) Allowances Net exposure TOTAL RMBS 4.8 3.4 (0.1) 3.3 US 1.4 0.9 (0.1) 0.8 Subprime 0.0 0.0 - 0.0 Mid-prime ---- Alt-A 0.4 0.2 (0.0) 0.2 Prime (2) 0.8 0.6 (0.1) 0.5 Agency 0.2 0.1 - 0.1 UK 1.1 1.0 - 1.0 3 Conforming 0.2 0.3 - 0.3 Non conforming 0.8 0.8 - 0.8 Spain 0.3 0.3 - 0.3 Netherlands 1.0 0.2 - 0.2 Other countries 1.1 0.9 (0.0) 0.9 CDO OF RMBS - - - - TOTAL CMBS 0.8 0.8 (0.0) 0.8 US 0.0 0.1 (0.0) 0.0 Non US 0.8 0.8 (0.0) 0.8 TOTAL CONSUMER RELATED ABS 5.6 4.7 (0.0) 4.6 Auto Loans/Leases 1.3 0.4 (0.0) 0.4 US 0.2--- Non US 1.1 0.4 (0.0) 0.4 Student Loans 3.0 3.0 (0.0) 3.0 Credit cards 0.9 0.9 - 0.9 Consumer Loans / Leases 0.1 0.1 - 0.1 Other ABS (equipment lease, ...) 0.3 0.3 - 0.3 CLOs AND CORPORATE CDOs 3.6 3.2 (0.0) 3.2 US 2.4 2.3 (0.0) 2.3 Non US 1.2 0.9 (0.0) 0.8 Sectorial Provision (0.1) TOTAL 14.6 12.1 (0.3) 11.8 (1) Entry price + accrued interests - amortisation. (2) Excluding Governement Sponsored Entity backed Securities.
The IN portfolio was included for the fi rst time in BNP Paribas’ balance The portfolio of RMBS and CMBS is of good quality: 70% are rated AA sheet upon the consolidation of Fortis’ assets from 12 May 2009. or higher (2). At 31 December 2010, the net exposure of the “IN“ portfolio The consumer credit related ABS comprises student loans, 96% of which stood at EUR 11.8 billion, down EUR 2.8 billion compared with are AAA-rated (2), auto loans of which 100% are rated AA or higher (2) and 31 December 2009, owing principally to amortisation and sales of assets. credit card outstandings of which 96% are AAA-rated (2). This portfolio carries a EUR 1.5 billion guarantee from the Belgian The portfolio of CLOs and corporate CDOs is diversifi ed. It comprises bonds government covering the second-loss tranche. Auto loans related ABS and corporate loans. 81% of the US assets are rated AA or higher (2). 42% decreased by EUR 0.9 billion compared with 31 December 2009. of the assets in other countries are rated AA or higher (2).
(1) Including Scaldis, ABCP refi nancing conduit consolidated by BNP Paribas Fortis. (2) Based on the lowest S&P, Moody’s & Fitch rating.
2010 Registration document and fi nancial report - BNP PARIBAS 89 2010 REVIEW OF OPERATIONS 3 Balance sheet
3.4 Balance sheet
ASSETS
OVERVIEW The decrease in trading book derivatives is primarily attributable to a 44% reduction in equity derivatives to EUR 39.4 billion and a 15% decline in The Group’s consolidated assets amounted to EUR 1,998.2 billion credit derivatives to EUR 30.3 billion. Conversely, interest rate derivatives at 31 December 2010, down 3% from EUR 2,057.7 billion at rose 10% to EUR 240 billion. 31 December 2009. The main components of the Group’s assets were fi nancial assets at fair value through profi t or loss, loans and Financial assets at fair value through profi t or loss accounted for 42% 3 receivables due from customers, available-for-sale fi nancial assets, of the Group’s total assets at 31 December 2010, compared with 40% at loans and receivables due from credit institutions, and accrued income 31 December 2009. and other assets, which together accounted for 94% of total assets at 31 December 2010 (vs. 93% at 31 December 2009). The 3% decrease in total assets refl ects: a 29%, or EUR 26.2 billion, reduction in loans and LOANS AND RECEIVABLES DUE FROM receivables due from credit institutions to EUR 62.7 billion; a 20%, or CREDIT INSTITUTIONS EUR 20.2 billion, decline in accrued income and other assets to EUR Loans and receivables due from credit institutions consist of demand 83.1 billion; and a 40%, or EUR 22.5 billion, decrease in cash accounts accounts, interbank loans, and repurchase agreements. to EUR 33.6 billion, partially offset by growth in other assets including a 1% increase in loans and receivables due from customers and a 0.5% Loans and receivables due from credit institutions (net of impairment increase in fi nancial assets at fair value through profi t or loss. provisions) amounted to EUR 62.7 billion at 31 December 2010, down 29% from EUR 88.9 billion at 31 December 2009. Most of this decrease is due to repurchase agreements, which fell 75% to EUR 7 billion at year- FINANCIAL ASSETS AT FAIR VALUE end 2010, from EUR 28.5 billion at year-end 2009. Demand accounts THROUGH PROFIT OR LOSS also decreased 31% to EUR 11.3 billion, from EUR 16.4 billion a year earlier. Impairment provisions declined slightly, from EUR 1 billion at Financial assets at fair or model value through profi t or loss consist of 31 December 2009 to EUR 0.9 billion at 31 December 2010. trading account transactions (including derivatives) and certain assets designated by the Group as at fair or model value through profi t or loss at the time of acquisition. Financial assets carried in the trading LOANS AND RECEIVABLES DUE FROM book include mainly securities, repurchase agreements, and derivatives. CUSTOMERS Assets designated by the Group as at fair or model value through profi t or loss include admissible investments related to unit-linked insurance Loans and receivables due from customers consist of demand accounts, contracts, and to a lesser extent assets with embedded derivatives that loans to customers, repurchase agreements, and fi nance leases. have not been separated from the host contract. Specifi cally, fi nancial Loans and receivables due from customers (net of impairment provisions) assets at fair value through profi t or loss are divided into the following amounted to EUR 684.7 billion at 31 December 2010, up 1% from EUR categories on the balance sheet: negotiable certifi cates of deposit; bonds; 678.8 billion at 31 December 2009. This growth is due to a 3% increase equities and other variable-income securities; repurchase agreements; in loans to customers, from EUR 616.9 billion at year-end 2009 to EUR loans to credit institutions, individuals, and corporate customers; and 633.6 billion at year-end 2010, together with a 36% decrease in repurchase trading book derivatives. These assets are remeasured at fair value at agreements, from EUR 25.9 billion at year-end 2009 to EUR 16.5 billion each balance sheet date. at year-end 2010. Demand accounts rose 6% to EUR 28.2 billion while Total fi nancial assets at fair value through profi t or loss amounted to EUR fi nance leases declined 5% to EUR 33 billion. Impairment provisions rose 832.9 billion at 31 December 2010, up 0.5% from EUR 828.8 billion at 5% to EUR 26.7 billion, up from EUR 25.4 billion a year earlier. 31 December 2009. This increase refl ects a 15%, or EUR 14.4 billion, rise in bonds to EUR 109.4 billion and a 14%, or EUR 13.9 billion, jump in equities and other variable-income securities to EUR 111.2 billion, partially offset by a 4%, or EUR 16 billion, decline in trading book derivatives to EUR 347.8 billion and a 13%, or EUR 7.9 billion, decrease in negotiable certifi cates of deposit to EUR 51.8 billion.
90 2010 Registration document and fi nancial report - BNP PARIBAS 2010 REVIEW OF OPERATIONS Balance sheet 3
AVAILABLE-FOR-SALE ASSETS HELD-TO-MATURITY FINANCIAL ASSETS Available-for-sale financial assets are fixed- and variable-income Held-to-maturity financial assets are investments with fixed or securities that cannot be classifi ed as fi nancial assets at fair value determinable payments and a fi xed maturity that the Group has the through profi t or loss or held-to-maturity fi nancial assets. These assets intention and the ability to hold until maturity. They are recognised in are remeasured at market or similar value at each balance sheet date. the balance sheet at amortised cost using the effective interest method, Available-for-sale financial assets (net of impairment provisions) and are divided into two categories: negotiable certifi cates of deposit amounted to EUR 219.9 billion at 31 December 2010, down 1% from and bonds. EUR 221.4 billion at 31 December 2009. This decrease is attributable to Held-to-maturity financial assets totalled EUR 13.8 billion at a 2% decline in bonds, from EUR 173.4 billion at year-end 2009 to EUR 31 December 2010, down 2% from EUR 14 billion at 31 December 2009. 170.1 billion at year-end 2010, and 8% decrease in equities and other variable-income securities, from EUR 22.5 billion at year-end 2009 to EUR 20.7 billion at year-end 2010, partially offset by a 15% increase in ACCRUED INCOME AND OTHER ASSETS negotiable certifi cates of deposit from EUR 28.3 billion at year-end 2009 Accrued income and other assets consist of the following: guarantee to EUR 32.5 billion at year-end 2010. deposits and guarantees paid; settlement accounts related to securities The Group recognised an additional EUR 0.5 billion of impairment transactions; collection accounts; reinsurers’ share of technical 3 provisions on available-for-sale fi nancial assets in 2010, bringing the reserves; accrued income and prepaid expenses; and other debtors and total from EUR 3.2 billion at 31 December 2009 to EUR 3.7 billion at miscellaneous assets. 31 December 2010. Impairment provisions for available-for-sale fi nancial Accrued income and other assets decreased 20% to EUR 83.1 billion assets are calculated at each balance sheet date. The unrealised at 31 December 2010, from EUR 103.4 billion at 31 December 2009. gain on available-for-sale fi nancial assets totalled EUR 0.4 billion at This decrease is primarily due to a 53%, or EUR 24.9 billion, decline in 31 December 2010, compared with EUR 4.4 billion a year earlier. The EUR settlement accounts related to securities transactions. 4 billion decrease refl ects a EUR 4.7 billion decline in the unrealised gain on fi xed-income securities and a EUR 0.7 billion increase in the unrealised gain on variable-income securities. CASH AND AMOUNTS DUE FROM CENTRAL BANKS AND POST OFFICE BANKS Cash and amounts due from central banks and post office banks decreased 40% to EUR 33.6 billion at year-end 2010, from EUR 56.1 billion at year-end 2009. This decline refl ects a EUR 22.5 billion decrease in loans to central banks.
LIABILITIES (EXCLUDING SHAREHOLDERS’ EQUITY)
OVERVIEW FINANCIAL LIABILITIES AT FAIR VALUE The Group’s consolidated liabilities totalled EUR 1,912.5 billion THROUGH PROFIT OR LOSS at 31 December 2010, down 3% from EUR 1,977.4 billion at The trading book primarily includes securities borrowing and short- 31 December 2009. The main components of the Group’s liabilities are selling transactions, repurchase agreements, and derivatives. Financial fi nancial liabilities at fair value through profi t or loss, amounts due to liabilities at fair or model value through profi t or loss consist mainly of credit institutions, amounts due to customers, debt securities, accrued originated and structured issues, where the risk exposure is managed expenses and other liabilities, and technical reserves of insurance in combination with the hedging strategy. These types of issues contain companies. These items together accounted for 97.4% of total liabilities signifi cant embedded derivatives, whose changes in value are set off by at 31 December 2010 (vs. 97.1% a year earlier). The 3% decrease refl ects changes in the value of the hedging instrument. a 24%, or EUR 52.7 billion, decline in amounts due to credit institutions to Total fi nancial liabilities at fair value through profi t or loss rose 2% to EUR 168 billion and a 4%, or EUR 23.9 billion, decline in amounts due to EUR 725.1 billion at year-end 2010, from EUR 709.3 billion at year- customers to EUR 580.9 billion. This was partially offset by a 2%, or EUR end 2009. This increase is due to a 23%, or EUR 18.8 billion, growth in 15.8 billion, increase in fi nancial liabilities at fair value through profi t or securities borrowing and short-selling transactions to EUR 102 billion loss to EUR 725.1 billion at 31 December 2010. and a 7%, or EUR 14 billion, increase in repurchase agreements to EUR 223.4 billion, together with a 3%, or EUR 10.7 billion, decrease in trading book derivatives to EUR 345.5 billion.
2010 Registration document and fi nancial report - BNP PARIBAS 91 2010 REVIEW OF OPERATIONS 3 Balance sheet
The decline in trading book derivatives primarily refl ects a 40% reduction SUBORDINATED DEBT in equity derivatives to EUR 40.9 billion, a 15% decline in credit derivatives Subordinated debt decreased 12% to EUR 24.7 billion at 31 December 2010, to EUR 30.3 billion, and a 39% decrease in other derivatives to EUR from EUR 28.2 billion the prior year. 7.6 billion. On the other hand, interest rate derivatives rose 12% to EUR 236.4 billion at 31 December 2010, from EUR 210.8 billion a year earlier. TECHNICAL RESERVES OF INSURANCE AMOUNTS DUE TO CREDIT INSTITUTIONS COMPANIES Amounts due to credit institutions consist primarily of borrowings, but Technical reserves of insurance companies grew 13% to EUR 114.9 billion also include demand deposits and repurchase agreements. at 31 December 2010, up from EUR 101.6 billion at 31 December 2009. This increase is primarily due to higher technical reserves at the life Amounts due to credit institutions fell 24% to EUR 168 billion at insurance business. 31 December 2010. This is due to the combined effect of a 62%, or EUR 30.8 billion, decrease in repurchase agreements to EUR 18.5 billion and a 17%, or EUR 27.0 billion, reduction in borrowings to EUR 131.9 billion. ACCRUED EXPENSES AND OTHER 3 LIABILITIES AMOUNTS DUE TO CUSTOMERS Accrued expenses and other liabilities consist of guarantee deposits received, settlement accounts related to securities transactions, Amounts due to customers consist primarily of demand deposits, term collection accounts, accrued expenses and deferred income, and other accounts, regulated savings accounts, and repurchase agreements. creditors and miscellaneous liabilities. Amounts due to customers totalled EUR 580.9 billion at 31 December 2010, Accrued expenses and other liabilities fell 10% to EUR 65.2 billion at down EUR 24 billion from EUR 604.9 billion at 31 December 2009. 31 December 2010, from EUR 72.4 billion at 31 December 2009. This This decline is attributable to a 56%, or EUR 35.6 billion, decrease in decrease refl ects a 34% decrease in settlement accounts related to repurchase agreements to EUR 27.5 billion, partially offset by a 3%, or EUR securities transactions to EUR 19.5 billion, partially offset by a 14% 6.9 billion, increase in term and related accounts to EUR 241.4 billion. increase in guarantee deposits received to EUR 25.8 billion.
DEBT SECURITIES MINORITY INTERESTS Debt securities consist of negotiable certifi cates of deposit and bond Minority interests edged up to EUR 11 billion at 31 December 2010, from issues. They do not include debt securities classified as “Financial EUR 10.8 billion at 31 December 2009. This increase is primarily due to a liabilities at fair value through profit or loss” (see note 5.a to the EUR 1.3 billion contribution to net income, less EUR 0.5 billion of dividend consolidated fi nancial statements). payouts and a EUR 0.4 billion redemption of preferred shares. Debt securities decreased 1% to EUR 208.7 billion at 31 December 2010, from EUR 211 billion at 31 December 2009. This decrease is due to a 2% reduction in negotiable certifi cates of deposit to EUR 186.7 billion together with a 12% increase in bond issues to EUR 22 billion.
CONSOLIDATED SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO THE GROUP
Consolidated shareholders’ equity attributable to the Group before the Assets and liabilities recognised directly in equity changed by EUR 2010 dividend payout amounted to EUR 74.6 billion at 31 December 2010, 1 billion, mainly as a result of lower unrealised gains on available-for- up from EUR 69.5 billion a year earlier. This EUR 5.2 billion increase sale fi nancial assets. is attributable to net income for the year of EUR 7.8 billion and share issuance amounting to EUR 0.6 billion, partially offset by a dividend payment of EUR 1.8 billion for the 2009 fi nancial year.
92 2010 Registration document and fi nancial report - BNP PARIBAS 2010 REVIEW OF OPERATIONS Profi t and loss account 3
OFF-BALANCE SHEET ITEMS
FINANCING COMMITMENTS GUARANTEE COMMITMENTS Financing commitments given to customers consist mostly of Guarantee commitments fell 2% to EUR 102.6 billion at 31 December 2010, documentary credits, other confi rmed letters of credit, and commitments down from EUR 104.7 billion a year earlier. This decline refl ects a 2% relating to repurchase agreements. These commitments grew 13% to EUR reduction in commitments to customers to EUR 92 billion, partially offset 269.3 billion at 31 December 2010. by a 2% increase in commitments to credit institutions to EUR 10.6 billion. Commitments to credit institutions rose 30% to EUR 45.4 billion. For further information concerning the Group’s fi nancing and guarantee commitments, see note 6 to the consolidated fi nancial statements. Financing commitments received consist primarily of stand-by letters of credit and commitments relating to repurchase agreements. Financing commitments received increased 50% to EUR 129.5 billion at 31 December 2010, up from EUR 86.1 billion the prior year. This growth is due to a 32% increase in commitments received from credit institutions 3 to EUR 104.8 billion and a 3.8x increase in commitments received from customers to EUR 24.7 billion.
3.5 Profi t and loss account
REVENUES
Change In millions of euros 2010 2009 (2010/2009) Net interest income 24,060 21,021 +14% Net commission income 8,486 7,467 +14% Net gain on fi nancial instruments at fair value through profi t or loss 5,109 6,085 -16% Net gain on available-for-sale fi nancial assets and other fi nancial assets not measured at fair value 452 436 +4% Net income from other activities 5,773 5,182 +11% TOTAL REVENUES 43,880 40,191 +9%
OVERVIEW Group, cash fl ow hedging instruments, interest rate portfolio hedging instruments, the trading book (fixed-income securities, repurchase The 9% growth in the Group’s 2010 revenue mainly reflects a 14% agreements, loans and borrowings, and debt securities), available-for- increase in net interest and commission income and an 11% increase sale fi nancial assets, and held-to-maturity financial assets. in net income from other activities, partially offset by a 16% decrease in the net gain on fi nancial instruments at fair value through profi t or loss. More specifi cally, under IFRS, the “Net interest income” line item includes: ■ Net interest income from the Group’s loans and receivables, including the interest, transaction costs, fees, and commissions included in the NET INTEREST INCOME initial value of the loan; these items are calculated using the effective The “Net interest income” line item includes net income and expenses interest method and recorded in the profi t and loss account over the related to customer items, interbank items, bonds issued by the life of the loan;
2010 Registration document and fi nancial report - BNP PARIBAS 93 2010 REVIEW OF OPERATIONS 3 Profi t and loss account
■ Net interest income from fi xed-income securities held by the Group The main factors affecting the level of net interest income are the relative which are classifi ed as “Financial assets at fair value through profi t volumes of interest-earning assets and interest-bearing liabilities and the or loss” (for the contractual accrued interest) and “Available-for-sale spread between lending and funding rates. Net interest income is also fi nancial assets” (for the interest calculated using the effective interest affected by the impact of hedging transactions, and, to a lesser extent, method); exchange rate fl uctuations. ■ Interest income from held-to-maturity assets, which are investments Interest-earning assets primarily include loans and receivables due from with fi xed or determinable payments and fi xed maturity that the Group customers, loans and receivables due from credit institutions, and fi xed- has the intention and ability to hold until maturity; and income securities classifi ed as “Financial assets at fair value through ■ Net interest income from cash flow hedges, which are used in profi t or loss” and “Available-for sale fi nancial assets”. The change in particular to hedge interest rate risk on variable-rate assets and these assets between 31 December 2009 and 31 December 2010 is liabilities. Changes in the fair value of cash fl ow hedges are recorded described in the following discussion of the Group’s balance sheet. in shareholders’ equity. The amounts recorded in shareholders’ equity Volumes of interest-earning assets and interest-bearing liabilities can be over the life of the hedge are transferred to “Net interest income” as affected by several factors in addition to general economic conditions and when the cash fl ows from the hedged item are recognised as profi t and growth of the Group’s lending activities, either organically or through 3 or loss in the income statement. acquisitions. One such factor is the Group’s business mix, such as the Interest income and expenses on hedging derivatives at fair value are relative proportion of capital allocated to interest-generating as opposed included with the interest generated by the hedged item. Similarly, to fee-generating businesses. In addition, the ratio of interest-earning interest income and expenses arising from hedging derivatives used assets to interest-bearing liabilities is affected by the funding of non- for transactions designated as at fair value through profi t or loss are interest income by way of interest-bearing loans (i.e., the cost of carry allocated to the same line items as the interest income and expenses of the Group’s trading portfolio), which increases the interest-bearing relating to the underlying transactions. liabilities without a corresponding increase in the interest-earning assets. Net interest income grew 14% in 2010 to EUR 24,060 million. This The other principal factor affecting net interest income is the spread increase is mainly due to a 6% increase in interest income on customer between lending and funding rates, which is also infl uenced by several transactions, from EUR 19,236 million in 2009 to EUR 20,418 million in factors. These include central bank funding rates (which affect both the 2010, refl ecting a EUR 1,070 million increase in income from loans and yield on interest-earning assets and the rates paid on sources of funding, borrowings as a result of higher interest rates and a 1% growth in loans although not always in a linear and simultaneous manner), the proportion to customers to EUR 684.7 billion. of funding sources represented by non-interest bearing customer deposits, government decisions to raise or lower rates on regulated Interest income on available-for-sale fi nancial assets increased 22% to savings accounts, the competitive environment, the relative weights of EUR 6,258 million, primarily as a result of higher interest rates, as the the Group’s various interest-bearing products, which have differing typical volume of these assets remained relatively unchanged over the year margins as a result of different competitive environments, and the Bank’s (down 1%). Interest expenses on the Group’s borrowings fell 21% to EUR hedging strategy and accounting treatment of hedging transactions. 3,320 million, from EUR 4,215 million a year earlier. Expenses (net of interest) on interbank transactions decreased 17%, from EUR 774 million in 2009 to EUR 644 million in 2010, mainly as a result NET COMMISSION INCOME of a 36% decrease in expenses (net of interest) related to loans and Net commission income includes commissions on interbank and money borrowings. market transactions, customer transactions, securities transactions, The growth in interest income was partially offset by a EUR 849 million foreign exchange and arbitrage transactions, securities commitments, decrease in the net gain on the trading book, which fell from EUR forward fi nancial instruments, and financial services. Net commission 2,666 million in 2009 to EUR 1,817 million in 2010, mainly as a result of income rose 14% to EUR 8,486 million in 2010, from EUR 7,467 million in a 26% reduction in interest income from fi xed-income securities to EUR 2009. This is primarily due to a EUR 236 million increase in commissions 2,586 million and a 61% decrease in interest income from repurchase from trusts and similar activities, which grew from EUR 2,215 million in agreements to EUR 1,081 million. These declines were partially offset 2009 to EUR 2,451 million in 2010, as well as a EUR 233 million increase by a 50% decrease in interest expenses on repurchase agreements to in commissions from fi nancial assets and liabilities that are not measured EUR 1,210 million. at fair value through profi t or loss, which rose from EUR 2,650 million in 2009 to EUR 2,884 million in 2010.
94 2010 Registration document and fi nancial report - BNP PARIBAS 2010 REVIEW OF OPERATIONS Profi t and loss account 3
NET GAIN ON FINANCIAL INSTRUMENTS of an impairment loss, these unrealised gains or losses are recognised in AT FAIR VALUE THROUGH PROFIT OR LOSS the profi t and loss account under “Net gain on available-for-sale financial assets and other fi nancial assets not measured at fair value”. This line item includes all profi t and loss items (other than interest income and expenses, which are recognised under “Net interest income” This line item also includes gains and losses on the sale of other fi nancial as discussed above) relating to fi nancial instruments managed in the assets not measured at fair value. trading book and to fi nancial instruments designated as fair value through The net gain on available-for-sale fi nancial assets and other nancialfi profi t or loss by the Group under the fair value option of IAS 39. This assets not measured at fair value grew 4%, or EUR 16 million, in 2010. includes both capital gains and losses on the sale and the marking-to- This increase results from a EUR 106 million increase in the net gain on market of these instruments, along with dividends from variable-income fi xed-income fi nancial assets, partially offset by a EUR 90 million decline securities. in the net gain on variable-income fi nancial assets. This line item also includes gains and losses due to the ineffectiveness of fair value hedges, cash fl ow hedges, and net foreign currency investment NET INCOME FROM OTHER ACTIVITIES hedges. This line item consists of net income from insurance activities, investment The net gain on fi nancial instruments at fair value through profi t or loss property, assets leased under operating leases, property development fell 16% to EUR 5,109 million in 2010, from EUR 6,085 million in 2009. 3 activities, and other products. Net income from other activities grew The gains and losses resulting from cash fl ows and the remeasurement of 11% to EUR 5,773 million in 2010, from EUR 5,182 million in 2009. This fi nancial instruments, either cash or derivatives, must be appreciated as increase is attributable primarily to a EUR 412 million increase in net a whole in order to give a fair representation of the profi t or loss resulting income from assets leased under operating leases and a EUR 328 million from trading activities. The decrease in this line item is primarily due to a increase in net income from insurance assets, partially offset by a EUR 52% decline in the net gain on the trading book to EUR 3,670 million and a 107 million decrease in income from other products. 37% decrease in the net gain on the remeasurement of foreign exchange positions to EUR 888 million, partially offset by an increase in the net The principal components of net income from insurance activities are gain on fi nancial instruments at fair value through profi t or loss under gross premiums written, movements in technical reserves, claims and the IAS 39 option, which increased from a loss of EUR 3,058 million in benefi t expenses, and changes in the value of admissible investments 2009 to a gain of EUR 524 million in 2010. The decrease in the net gain related to unit-linked contracts. Claims and benefi ts expenses include on the trading book mainly refl ects a 39% decrease in income from debt expenses arising from surrenders, maturities, and claims relating to instruments to EUR 1,657 million and a 71% reduction in income from insurance contracts, as well as changes in the value of fi nancial contracts capital instruments to EUR 1,303 million. (in particular unit-linked contracts). Interest paid on such contracts is recognised under “Interest expense”. The increase in income from insurance activities refl ects a decrease NET GAIN ON AVAILABLE-FOR-SALE in the charge for technical reserves from EUR 10,075 million in 2009 FINANCIAL ASSETS AND OTHER FINANCIAL to EUR 7,608 million in 2010, which is due to a reduction in the value ASSETS NOT MEASURED AT FAIR VALUE of investments related to unit-linked contracts from a net gain of This line item includes assets classifi ed as available-for-sale. Changes EUR 3,864 million in 2009 to a net gain of EUR 1,412 million in 2010. in fair value (excluding interest due) of these assets are initially Gross premiums written grew from EUR 16,876 million in 2009 to EUR recognised under “Change in assets and liabilities recognised directly in 18,691 million in 2010, while claims and benefi t expenses rose from EUR shareholders’ equity”. Upon the sale of such assets or upon recognition 7,516 million in 2009 to EUR 8,996 million in 2010.
2010 Registration document and fi nancial report - BNP PARIBAS 95 2010 REVIEW OF OPERATIONS 3 Profi t and loss account
OPERATING EXPENSES, DEPRECIATION, AND AMORTISATION
Change In millions of euros 2010 2009 (2010/2009) Operating expenses (24,924) (21,958) +14% Depreciation, amortisation, and impairment of property, plant, and equipment and intangible assets (1,593) (1,382) +15% TOTAL OPERATING EXPENSES, DEPRECIATION, AND AMORTISATION (26,517) (23,340) +14%
Operating expenses, depreciation, and amortisation rose 14% to EUR 26,517 million in 2010 from EUR 23,340 million in 2009. 3 GROSS OPERATING INCOME
The Group’s gross operating income grew 3% to EUR 17,363 million in 2010 from EUR 16,851 million in 2009 on the back of a 14% increase in operating expenses together with a smaller 9% increase in revenues.
COST OF RISK
Change In millions of euros 2010 2009 (2010/2009) Net additions to impairment provisions (4,594) (8,161) -44% Recoveries on loans and receivables previously written off 393 420 -6% Irrecoverable loans and receivables not covered by impairment provisions (601) (628) -4% TOTAL NET ADDITIONS TO PROVISIONS (4,802) (8,369) -43%
This line item represents the net amount of impairment losses recognised Total doubtful loans and commitments net of guarantees amounted to for credit risks inherent in the Group’s intermediation activities, plus any EUR 36 billion at year-end 2010, up from EUR 31 billion a year earlier, impairment losses relating to counterparty risks on over-the-counter and provisions totalled EUR 29 billion, up from EUR 28 billion a year derivative instruments. earlier. The Group’s coverage ratio was 81% at 31 December 2010, down from 88% at 31 December 2009, in an overall improved risk environment. The cost of risk fell in 2010 on the back of a sharp reduction in impairment provisions due to an 87% decrease in provisions at the Corporate and For a more detailed discussion of the net additions to provisions for each Investment Banking business to EUR 314 million (compared to EUR division, see the section of this chapter titled “Core business results”. 2,473 million in 2009), which includes a 99% decrease in the provision for fi nancing activities to EUR 7 million in 2010 (compared to a provision of EUR 1,533 million in 2009). The provision at the Retail Banking business fell 22% to EUR 4,582 million (compared to EUR 5,847 million in 2009), including a 61% decline in the provision for BancWest to EUR 465 million in 2010 (compared to EUR 1,195 million in 2009).
96 2010 Registration document and fi nancial report - BNP PARIBAS 2010 REVIEW OF OPERATIONS Profi t and loss account 3
NET INCOME ATTRIBUTABLE TO THE GROUP
Change In millions of euros 2010 2009 (2010/2009) OPERATING INCOME 12,561 8,482 +48% Share of earnings of associates 268 178 +51% Net gain on non-current assets 269 87 3.1x Change in value of goodwill (78) 253 n.s. Income tax expense (3,856) (2,526) +53% Minority interests (1,321) (642) 2.1x NET INCOME ATTRIBUTABLE TO THE GROUP 7,843 5,832 +34% 3 OVERVIEW CHANGE IN VALUE OF GOODWILL Net income attributable to the Group grew a sharp 34% in 2010. The change in the value of goodwill shifted from a positive EUR 253 million in 2009 to a negative EUR 78 million in 2010. This refl ects negative goodwill of EUR 835 million on the 2009 acquisitions of SHARE OF EARNINGS OF ASSOCIATES BNP Paribas Fortis, BGL BNP Paribas, and their subsidiaries, partially The Group’s share of earnings of associates (i.e., companies accounted offset by a EUR 582 million impairment charge on the goodwill from for under the equity method) rose from EUR 178 million in 2009 to EUR the acquisitions of Personal Finance, Arval, UkrSibBank, and Banque du 268 million in 2010 as a result of broadly higher net income at these Sahara. companies. INCOME TAX EXPENSE NET GAIN ON NON-CURRENT ASSETS The Group’s income tax expense totalled EUR 3,856 million in 2010, up This line item includes net realised gains and losses on sales of property, from EUR 2,526 million in 2009 as a result of higher net income before tax. plant, equipment, and intangible assets used in operations, and on sales of investments in consolidated undertakings still included in the scope of consolidation at the time of sale. The net gain on non-current assets MINORITY INTERESTS rose from EUR 87 million in 2009 to EUR 269 million in 2010. The share of earnings attributable to minority interests in consolidated companies grew to EUR 1,321 million in 2010, from EUR 642 million in 2009, in particular due to the integration of BNP Paribas Fortis with a full-year effect (compared to seven and a half months in 2009) against a backdrop of profi tability recovery of this sub-group after implementation of the integration plan.
2010 Registration document and fi nancial report - BNP PARIBAS 97 2010 REVIEW OF OPERATIONS 3 Recent events
3.6 Recent events
PRODUCTS AND SERVICES
BNP Paribas regularly introduces new products and services for its customers. More information is available on the Group’s websites, including in the press releases available at www.invest.bnpparibas.com.
3 ACQUISITIONS AND PARTNERSHIPS
No signifi cant acquisition or partnership events have occurred since the third update to the 2009 Registration document was issued on 8 November 2010.
98 2010 Registration document and fi nancial report - BNP PARIBAS 2010 REVIEW OF OPERATIONS Outlook 3
3.7 Outlook
CORE BUSINESSES
RETAIL BANKING Outside of the markets of Western Europe, growth potential will be exploited by expanding PF Inside, a model for deploying consumer loans In the four domestic networks (France, Italy, Belgium and Luxembourg), in the Group’s networks, especially in Poland, Ukraine, North Africa and the Group will continue its dedication to serve the economy and support China. The taking of control of TEB CTLM in Turkey as part of the recent households and businesses in their fi nancing needs. agreements and new partnerships in the car loan business will also Thus, for individual customers, the networks will maintain the contribute to growth. technological innovation drive, will pursue the rolling out of the Private 3 Banking model, especially in Belgium, and will grow the distribution of insurance products. In Italy, BNL bc will complete efforts to renovate INVESTMENT SOLUTIONS its network and will upgrade its product offering targeting corporates. In 2011, the division will endeavour to take full advantage of its For corporates and small businesses, the networks will endeavour to partnership with Retail Banking by continuing to roll out Private Banking’s expand the product offering and grow cross-selling with Investment intragroup partnership model and capitalise on its working relationship Solutions and CIB (Structured Finance, forex and fi xed income products), with CIB in order to expand the product offering. continue to develop cash management services, open close to 30 new The division will continue its efforts to win new private banking and Small Business Centres in France and develop closer relationships with institutional clients. midcaps in Italy. Lastly, the division will continue expanding businesses in the Asia Pacifi c: In the other retail banking networks, the emphasis will be placed on it will capitalise on the existing organisation in Asset Management, introducing targeted business development plans designed to improve improve its position in the top fi ve private banks in Hong Kong and the profi tability of franchises: Singapore, maintain its drive in Insurance in India, Japan, Korea and ■ After a year marked by a return to profi ts, BancWest will implement a Taiwan and keep expanding the presence of the Securities Services business development plan with technology investments in its product business unit in the region. offering and the distribution channels in order to increase cross-selling and boost customer acquisition. CORPORATE AND INVESTMENT BANKING ■ In addition to continuing to roll out the integrated model throughout the entire network, Europe-Mediterranean will focus on pursuing (CIB) business development efforts in Poland and making the operating In Europe, CIB will continue to provide fi nancing to large corporations and cost base more fl exible in Ukraine after a year 2010 spent restructuring cover their market risks and will be providing more strategic advisory the business. services on M&As and rights issues. The unmatched pan-European fl ow ■ In Turkey, the legal merger of TEB and Fortis Bank Turkey (600 product offering (the Corporate and Transaction Banking Europe, or CTBE, branches, EUR 5.6 billion in deposits and EUR 7.4 billion in loans) organisation) will be aggressively marketed to customers. was completed on 14 February 2011, creating the country’s 9th In the United States, CIB will make selected improvements to its largest bank. BNP Paribas maintains joint control of the merged entity organisation, especially its debt platform to better serve the needs of and there was virtually no impact on the Group’s solvency. Due to large corporate issuers and fi nancial institutions and will develop its M&A the Group’s direct equity investments, the New TEB entity will be services, drawing on the Energy & Commodities franchise. consolidated on a 67% proportional basis. The business plan based on rolling out BNP Paribas’s integrated model, provides for 86 million In Asia, CIB will enhance its ability to deliver solutions to a broad range euros in net synergies by 2013, primarily in Retail Banking (75%) and of clients in order to take advantage of the fast-growing region drawing in CIB (22%). Restructuring costs are expected to total EUR 123 million on the Group’s global franchises. CIB will expand its customer base and over 3 years. bring in new talent in China, India and Korea. Lastly, Personal Finance will take advantage in 2011 of strong growth potential in developed and emerging countries. In France, the launch of Cetelem Bank will make it possible to develop savings solutions sold via a new multi-channel marketing model geared directly to customers. In Italy, the business unit will continue to market Findomestic’s Carte Nova deferred debit or credit card, at the customer’s choice. In Belgium, it will speed up the pace of distributing AlphaCrédit’s products through the BNP Paribas Fortis network. In Germany, Personal Finance will benefi t from strong growth in volumes in connection with its partnership alliance with Commerzbank.
2010 Registration document and fi nancial report - BNP PARIBAS 99 2010 REVIEW OF OPERATIONS 3 Outlook
HIGH SOLVENCY, ACCESS TO A WIDE VARIETY OF LIQUIDITY SOURCES
BNP Paribas has broad access to a variety of liquidity sources: The substantial amount of retained earnings and the optimal management of risk weighted assets, which, at EUR 601 billion, were ■ its large stable deposit base (EUR 553 billion) thanks to its position in down EUR 20 billion compared to 31 December 2009 despite the rise Retail Banking at the heart of the euro zone, its reserve of central bank in the dollar, enabled the Group to further strengthen its solvency eligible collateral (EUR 160 billion available), as well as the quality considerably. As at 31 December 2010, the common equity Tier 1 ratio of its collateral enabling it to issue covered bonds are all structural was 9.2% compared to 8.0% as at 31 December 2009 or a year-on-year strengths; increase of 120bp due essentially to the organic generation of equity ■ it also has, compared to its peers, capacity to issue medium and (+80bp) and the decrease in risk weighted assets (+30bp). long term debt in leading fi nancial markets (EUR, USD, AUD, JPY) on very favourable spread and maturity terms. It thus managed to raise The Group’s balance sheet, which totalled EUR 1,998 billion as EUR 7 billion in January 2011 with an average maturity extended to at 31 December 2010, was down slightly compared to 31 December 2009 8 years for a total programme of EUR 35 billion planned in 2011. (EUR 2,058 billion) despite the rise in the dollar relative to the euro during 3 the period. This drop is due in part to the reduction in trading assets and repos (EUR -30 billion) and loans to central banks (EUR -22 billion). Available-for-sale assets were stable at EUR 220 billion. Their valuation at the market price (EUR -0.014 billion euros) had virtually no impact on the book value.
100 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED 4 BY THE EUROPEAN UNION
4.1 Profi t and loss account for the year ended 31 december 2010 104
4.2 Statement of net income and changes in assets and liabilities recognised directly in equity 105
4.3 Balance sheet at 31 december 2010 106
4.4 Cash fl ows statement for the year ended 31 december 2010 107
4.5 Statement of changes in shareholders’ equity between 1 jan. 2009 and 31 dec. 2010 108
4.6 Notes to the fi nancial statements prepared in accordance with International Financial Reporting Standards as adopted by the European Union 110 Note 1 Summary of signifi cant accounting policies applied by the Group 110 1.a Applicable accounting standards 110 1.b Consolidation 110 1.b.1 Scope of consolidation 110 1.b.2 Consolidation methods 110 1.b.3 Consolidation procedures 111 1.b.4 Business combinations and measurement of goodwill 111 1.c Financial assets and financial liabilities 112 1.c.1 Loans and receivables 112 1.c.2 Regulated savings and loan contracts 113 1.c.3 Securities 113 1.c.4 Foreign currency transactions 114 1.c.5 Impairment of financial assets 114 1.c.6 Reclassification of financial assets 115 1.c.7 Issues of debt securities 116 1.c.8 Own equity instruments and own equity instrument derivatives 116 1.c.9 Derivative instruments and hedge accounting 116 1.c.10 Determination of fair value 117 1.c.11 Financial assets and liabilities designated at fair value through profit or loss (fair value option) 118 1.c.12 Income and expenses arising from financial assets and financial liabilities 118 1.c.13 Cost of risk 118 1.c.14 Derecognition of financial assets and financial liabilities 118 1.c.15 Offsetting financial assets and financial liabilities 119
2010 Registration document and fi nancial report - BNP PARIBAS 101 CONSOLIDATED FINANCIAL STATEMENTS 4
1.d Accounting standards specific to insurance business 119 1.d.1 Assets 119 1.d.2 Liabilities 119 1.d.3 Profit and loss account 119 1.e Property, plant, equipment and intangible assets 120 1.f Leases 120 1.f.1 Lessor accounting 120 1.f.2 Lessee accounting 121 1.g Non-current assets held for sale and discontinued operations 121 1.h Employee benefits 121 1.i Share-based payment 122 1.j Provisions recorded under liabilities 123 1.k Current and deferred taxes 123 1.l Cash flows statement 123 1.m Use of estimates in the preparation of the financial statements 123 Note 2 Notes to the profi t and loss account for the year ended 31 December 2010 124 4 2.a Net interest income 124 2.b Commission income and expense 125 2.c Net gain/loss on financial instruments at fair value through profit or loss 125 2.d Net gain/loss on available-for-sale financial assets and other financial assets not measured at fair value 125 2.e Net income from other activities 126 2.f Cost of risk 126 2.g Corporate income tax 127 Note 3 Segment information 128 Note 4 Risk management and capital adequacy 131 4.a Risk management organisation 131 4.b Risks categories 131 4.c Risk management and capital adequacy 139 4.d Credit and counterparty risk 141 4.e Market risk 155 4.f Operational risk 164 4.g Compliance and reputation risks 168 4.h Liquidity and refinancing risk 168 4.i Insurance risks 170 Note 5 Notes to the balance sheet at 31 December 2010 172 5.a Financial assets, financial liabilities and derivatives at fair value through profit or loss 172 5.b Derivatives used for hedging purposes 174 5.c Available-for-sale financial assets 175 5.d Measurement of the fair value of financial instruments 175 5.e Reclassification of financial instruments initially recognised at fair value through profit or loss held for trading purposes or as available-for-sale assets 179 5.f Interbank and money-market items 180 5.g Customer items 181 5.h Debt securities and subordinated debt 182 5.i Held-to-maturity financial assets 185 5.j Current and deferred taxes 185 5.k Accrued income/expense and other assets/liabilities 186
102 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS 4
5.l Investments in associates 186 5.m Property, plant, equipment and intangible assets used in operations, investment property 187 5.n Goodwill 188 5.o Technical reserves of insurance companies 190 5.p Provisions for contingencies and charges 190 Note 6 Financing commitments and guarantee commitments 192 6.a Financing commitments given or received 192 6.b Guarantee commitments given by signature 192 6.c Other guarantee commitments 192 Note 7 Salaries and employee benefi ts 193 7.a Salary and employee benefit expenses 193 7.b Post-employment benefits 193 7.c Other long-term benefits 198 7.d Termination benefits 198 7.e Share-based payments 198 Note 8 Additional information 203 8.a Changes in share capital and earnings per share 203 8.b Scope of consolidation 212 4 8.c Change in the group’s interest and minority interests in the equity of subsidiaries 234 8.d Business combinations 236 8.e Compensation and benefits awarded to the group’s corporate officers 240 8.f Related parties 248 8.g Balance sheet by maturity 250 8.h Fair value of financial instruments carried at amortised cost 251 8.i Contingent liabilities: legal proceeding and arbitration 252 8.j Fees paid to the statutory auditors 253
4.7 BNP Paribas Statutory Auditors’ report on the consolidated fi nancial statements 254
2010 Registration document and fi nancial report - BNP PARIBAS 103 CONSOLIDATED FINANCIAL STATEMENTS 4 Profi t and loss account for the year ended 31 december 2010
The consolidated fi nancial statements of the BNP Paribas Group are presented for the years ended 31 December 2010 and 31 December 2009. In accordance with Article 20.1 of Annex I of European Commission Regulation (EC) 809/2004, the consolidated fi nancial statements for 2008 are provided in the Registration document fi led with the Autorité des marchés fi nanciers on 11 March 2009 under number D.09-0114.
4.1 Profi t and loss account for the year ended 31 december 2010
In millions of euros Note Year to 31 Dec. 2010 Year to 31 Dec. 2009 Interest income 2.a 47,388 46,460 Interest expense 2.a (23,328) (25,439) Commission income 2.b 13,857 12,276 4 Commission expense 2.b (5,371) (4,809) Net gain/loss on fi nancial instruments at fair value through profi t or loss 2.c 5,109 6,085 Net gain/loss on available-for-sale fi nancial assets and other fi nancial assets not measured at fair value 2.d 452 436 Income from other activities 2.e 30,385 28,781 Expense on other activities 2.e (24,612) (23,599) REVENUES 43,880 40,191 Operating expense (24,924) (21,958) Depreciation, amortisation and impairment of property, plant and equipment and intangible assets 5.m (1,593) (1,382) GROSS OPERATING INCOME 17,363 16,851 Cost of risk 2.f (4,802) (8,369) OPERATING INCOME 12,561 8,482 Share of earnings of associates 268 178 Net gain on non-current assets 269 87 Goodwill 5.n (78) 253 PRE-TAX INCOME 13,020 9,000 Corporate income tax 2.g (3,856) (2,526) NET INCOME 9,164 6,474 Net income attributable to minority interests 1,321 642 NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS 7,843 5,832 Basic earnings per share 8.a 6.33 5.20 Diluted earnings per share 8.a 6.32 5.20
104 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Statement of net income and changes in assets and liabilities recognised directly in equity 4
4.2 Statement of net income and changes in assets and liabilities recognised directly in equity
In millions of euros Year to 31 Dec. 2010 Year to 31 Dec. 2009 Net income for the period 9,164 6,474 Changes in assets and liabilities recognised directly in equity (1,085) 2,927 Items related to exchange rate movements 1,354 64 Changes in fair value of available-for-sale fi nancial assets (2,373) 2,834 4 Changes in fair value of available-for-sale assets reported in net income (69) 8 Changes in fair value of hedging instruments 33 (137) Changes in fair value of hedging instruments reported in net income (28) (37) Items related to equity-accounted companies (2) 195 TOTAL 8,079 9,401 Attributable to equity shareholders 6,837 8,537 Attributable to minority interests 1,242 864
2010 Registration document and fi nancial report - BNP PARIBAS 105 CONSOLIDATED FINANCIAL STATEMENTS 4 Balance sheet at 31 december 2010
4.3 Balance sheet at 31 december 2010
In millions of euros Note 31 December 2010 31 December 2009 ASSETS Cash and amounts due from central banks and post offi ce banks 33,568 56,076 Financial assets at fair value through profi t or loss 5.a 832,945 828,784 Derivatives used for hedging purposes 5.b 5,440 4,952 Available-for-sale fi nancial assets 5.c 219,958 221,425 Loans and receivables due from credit institutions 5.f 62,718 88,920 Loans and receivables due from customers 5.g 684,686 678,766 Remeasurement adjustment on interest-rate risk hedged portfolios 2,317 2,407 Held-to-maturity fi nancial assets 5.i 13,773 14,023 Current and deferred tax assets 5.j 11,557 12,117 Accrued income and other assets 5.k 83,124 103,361 4 Investments in associates 5.l 4,798 4,761 Investment property 5.m 12,327 11,872 Property, plant and equipment 5.m 17,125 17,056 Intangible assets 5.m 2,498 2,199 Goodwill 5.n 11,324 10,979 TOTAL ASSETS 1,998,158 2,057,698 LIABILITIES Due to central banks and post offi ce banks 2,123 5,510 Financial liabilities at fair value through profi t or loss 5.a 725,105 709,337 Derivatives used for hedging purposes 5.b 8,480 8,108 Due to credit institutions 5.f 167,985 220,696 Due to customers 5.g 580,913 604,903 Debt securities 5.h 208,669 211,029 Remeasurement adjustment on interest-rate risk hedged portfolios 301 356 Current and deferred tax liabilities 5.j 3,745 4,762 Accrued expenses and other liabilities 5.k 65,229 72,425 Technical reserves of insurance companies 5.o 114,918 101,555 Provisions for contingencies and charges 5.p 10,311 10,464 Subordinated debt 5.h 24,750 28,209 TOTAL LIABILITIES 1,912,529 1,977,354 CONSOLIDATED EQUITY Share capital and additional paid-in capital 25,659 25,061 Retained earnings 40,961 37,433 Net income for the period attributable to shareholders 7,843 5,832 Total capital, retained earnings and net income for the period attributable to shareholders 74,463 68,326 Change in assets and liabilities recognised directly in equity 169 1,175 Shareholders’ equity 74,632 69,501 Retained earnings and net income for the period attributable to minority interests 11,293 11,060 Change in assets and liabilities recognised directly in equity (296) (217) Total minority interests 10,997 10,843 TOTAL CONSOLIDATED EQUITY 85,629 80,344 TOTAL LIABILITIES AND EQUITY 1,998,158 2,057,698
106 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Cash fl ows statement for the year ended 31 december 2010 4
4.4 Cash fl ows statement for the year ended 31 december 2010
In millions of euros Note Year to 31 Dec. 2010 Year to 31 Dec. 2009 Pre-tax net income 13,020 9,000 Non-monetary items included in pre-tax net income and other adjustments 18,832 8,017 Net depreciation/amortisation expense on property, plant and equipment and intangible assets 3,739 3,534 Impairment of goodwill and other non-current assets 136 (95) Net addition to provisions 10,877 15,794 Share of earnings of associates (269) (178) Net income from investing activities 288 (39) Net income from fi nancing activities (2,303) (1,200) Other movements 6,364 (9,799) Net (decrease) increase in cash related to assets and liabilities generated by operating activities (34,550) 14,976 Net decrease in cash related to transactions with credit institutions (31,425) (51,299) 4 Net (decrease) increase in cash related to transactions with customers (34,964) 48,115 Net increase in cash related to transactions involving other fi nancial assets and liabilities 37,530 22,583 Net decrease in cash related to transactions involving non-fi nancial assets and liabilities (2,557) (2,311) Taxes paid (3,134) (2,112) NET (DECREASE) INCREASE IN CASH AND EQUIVALENTS GENERATED BY OPERATING ACTIVITIES (2,698) 31,993 Net (decrease) increase in cash related to acquisitions and disposals of consolidated entities 8.d (4,940) 1,763 Net decrease related to property, plant and equipment and intangible assets (1,790) (1,391) NET (DECREASE) INCREASE IN CASH AND EQUIVALENTS RELATED TO INVESTING ACTIVITIES (6,730) 372 (Decrease) Increase in cash and equivalents related to transactions with shareholders (759) 4,342 Decrease in cash and equivalents generated by other fi nancing activities (22,054) (24,580) NET DECREASE IN CASH AND EQUIVALENTS RELATED TO FINANCING ACTIVITIES (22,813) (20,238) EFFECT OF MOVEMENT IN EXCHANGE RATES ON CASH AND EQUIVALENTS 3,053 (886) NET (DECREASE) INCREASE IN CASH AND EQUIVALENTS (29,188) 11,241 Balance of cash and equivalent accounts at the start of the period 54,202 42,961 Cash and amounts due from central banks and post offi ce banks 56,076 39,219 Due to central banks and post offi ce banks (5,510) (1,047) Demand deposits with credit institutions 5.f 16,379 13,514 Demand loans from credit institutions 5.f (12,380) (8,673) Deduction of receivables and accrued interest on cash and equivalents (362) (52) Balance of cash and equivalent accounts at the end of the period 25,015 54,202 Cash and amounts due from central banks and post offi ce banks 33,568 56,076 Due to central banks and post offi ce banks (2,123) (5,510) Demand deposits with credit institutions 5.f 11,273 16,379 Demand loans from credit institutions 5.f (17,464) (12,381) Deduction of receivables and accrued interest on cash and equivalents (239) (362) NET (DECREASE) INCREASE IN CASH AND EQUIVALENTS (29,188) 11,241
2010 Registration document and fi nancial report - BNP PARIBAS 107 CONSOLIDATED FINANCIAL STATEMENTS 4 Statement of changes in shareholders’ equity between 1 jan. 2009 and 31 dec. 2010
4.5 Statement of changes in shareholders’ equity
Capital and retained earnings Attributable to shareholders Ordinary shares, non- Undated Super voting shares Subordinated Non- and additional Notes eligible as distributed In millions of euros paid-in capital Tier 1 capital reserves Total Capital and retained earnings at 31 December 2008 13,527 10,521 30,710 54,758 Appropriation of net income for 2008 (1,044) (1,044) Increase in share capital linked to the acquisition of Fortis 6,197 6,197 Issue of non-voting shares 5,097 5,097 Increase in capital with a view to the repurchase of non-voting shares 4,253 4,253 Redemption of non-voting shares (5,253) (5,253) Other increases in capital 1,080 69 1,149 4 Redemption of undated fl oating-rate subordinated notes (2,550) (2,550) Movements in own equity instruments 258 5 (72) 191 Share-based payment plans 79 14 93 Remuneration on Preferred Shares and undated super subordinated notes (335)(335) Impact of the acquisition of Fortis - Impact of internal transactions impacting minority shareholders (note 8.c) (17)(17) Change in consolidation method impacting minority shareholders - Acquisitions of additional interests or partial sales of interests (note 8.c) (40)(40) Change in commitments to repurchase minority shareholders’ interests 15 15 Other movements (50) 30 (20) Change in assets and liabilities recognised directly in equity - Net income for 2009 5,832 5,832 Interim dividend payments - Capital and retained earnings at 31 December 2009 25,188 8,045 35,093 68,326 Appropriation of net income for 2009 (1,776) (1,776) Increases in capital and issues 624 624 Reduction in capital (40) (40) Impact of redemption of non-voting shares (72) (72) Movements in own equity instruments 9 (16) 5 (2) Share-based payment plans 7 (5) 2 Remuneration on Preferred Shares and undated super subordinated notes (310)(310) Impact of internal transactions impacting minority shareholders (note 8.c) (23)(23) Change in consolidation method impacting minority shareholders -- Acquisitions of additional interests or partial sales of interests (53) (53) Change in commitments to repurchase minority shareholders’ interests 22 Other movements (5) (53) (58) Change in assets and liabilities recognised directly in equity - Net income for 2010 7,8437,843 Interim dividend payments - Capital and retained earnings at 31 December 2010 25,711 8,029 40,723 74,463
108 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Statement of changes in shareholders’ equity between 1 jan. 2009 and 31 dec. 2010 4
between 1 jan. 2009 and 31 dec. 2010
Change in assets and liabilities recognised directly in equity Minority interests Attributable to shareholders Preferred shares Financial Derivatives Capital and eligible assets used for retained as Tier 1 Exchange available for hedging Minority earnings capital Total rates sale purposes Total interests Total equity 3,849 2,330 6,179 (1,680) (568) 718 (1,530) (439) 58,968 (226) (226) (1,270) - 6,197 - 5,097 - 4,253 - (5,253) - 1,149 - (2,550) 4 - 191 - 93 (149) (149) (484) 4,087 4,087 4,087 17 17 - (23) (23) (23) 506 506 466 (20) (20) (5) 91 91 71 - 121 2,729 (145) 2,705 222 2,927 642 642 6,474 (44) (44) (44) 8,730 2,330 11,060 (1,559) 2,161 573 1,175 (217) 80,344 (359) (359) (2,135) 132 132 756 (130) (440) (570) (610) - (72) 22 - - 2 (146) (146) (456) 23 23 - (223) (223) (223) (137) (137) (190) 145 145 147 90 90 32 - 1,158 (2,175) 11 (1,006) (79) (1,085) 1,321 1,321 9,164 (45) (45) (45) 9,401 1,892 11,293 (401) (14) 584 169 (296) 85,629
2010 Registration document and fi nancial report - BNP PARIBAS 109 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
4.6 Notes to the fi nancial statements prepared in accordance with International Financial Reporting Standards as adopted by the European Union
Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES APPLIED BY THE GROUP
1.a APPLICABLE ACCOUNTING STANDARDS Subsidiaries are consolidated from the date on which the Group obtains effective control. Entities under temporary control are included in the The consolidated fi nancial statements of the BNP Paribas Group have consolidated fi nancial statements until the date of disposal. been prepared in accordance with international accounting standards (International Financial Reporting Standards – IFRS), as adopted for use The Group also consolidates special purpose entities (SPEs) formed in the European Union (1). Accordingly, certain provisions of IAS 39 on specifi cally to manage a transaction or a group of transactions with hedge accounting have been excluded, and certain recent texts have not similar characteristics, even where the Group has no equity interest in the 4 yet undergone the approval process. entity, provided that the substance of the relationship indicates that the Group exercises control as assessed by reference to the following criteria: In the consolidated fi nancial statements at 31 December 2010, the Group applies the provisions of the revised IFRS 3 and IAS 27 on Business ■ the activities of the SPE are being conducted exclusively on behalf of Combinations and on Consolidated and Separate Financial Statements the Group, such that the Group obtains benefi ts from those activities; respectively. These revised standards are applicable prospectively and ■ the Group has the decision-making and management powers to obtain therefore had no effect on the accounting treatment of transactions the majority of the benefi ts of the ordinary activities of the SPE (as completed prior to 1 January 2010. evidenced, for example, by the power to dissolve the SPE, to amend its The introduction of other standards, which are mandatory as of bylaws, or to exercise a formal veto over amendments to its bylaws); 1 January 2010, had no effect on the consolidated fi nancial statements ■ the Group has the ability to obtain the majority of the benefi ts of the for the year ended 31 December 2010. SPE, and therefore may be exposed to risks incident to the activities of the SPE. These benefi ts may be in the form of rights to some or all The Group did not choose to early-adopt the new standards, amendments, of the SPE’s earnings (calculated on an annual basis), to a share of and interpretations adopted by the European Union and whose application its net assets, to benefi t from one or more assets, or to receive the in 2010 was optional. majority of the residual assets in the event of liquidation; ■ the Group retains the majority of the risks taken by the SPE in order to obtain benefi ts from its activities. This would apply, for example, 1.b CONSOLIDATION if the Group remains exposed to the initial losses on a portfolio of assets held by the SPE. 1.b.1 Scope of consolidation The consolidated financial statements of BNP Paribas include all 1.b.2 Consolidation methods entities under the exclusive or joint control of the Group or over which Enterprises under the exclusive control of the Group are fully consolidated. the Group exercises signifi cant infl uence, with the exception of those The Group has exclusive control over an enterprise where it is in a entities whose consolidation is regarded as immaterial to the Group. The position to govern the fi nancial and operating policies of the enterprise consolidation of an entity is regarded as immaterial if its contribution so as to obtain benefi ts from its activities. Exclusive control is presumed to the consolidated fi nancial statements is below the following three to exist when the BNP Paribas Group owns, directly or indirectly, more thresholds: EUR 8 million of consolidated Revenues, EUR 1 million of, than half of the voting rights of an enterprise. It also exists when the consolidated gross operating income or net income before tax, EUR Group has the power to govern the fi nancial and operating policies of 40 million of total consolidated assets. Companies that hold shares in the enterprise under an agreement; to appoint or remove the majority consolidated companies are also consolidated. of the members of the Board of Directors or equivalent governing body; or to cast the majority of votes at meetings of the Board of Directors or equivalent governing body.
(1) The full set of standards adopted for use in the European Union can be consulted on the website of the European Commission at: http://ec.europa.eu/internal_market/accounting/ ias_en.htm#adopted-commission
110 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Currently exercisable or convertible potential voting rights are taken into and dividends), are eliminated. Profi ts and losses arising from intragroup account when determining the percentage of control held. sales of assets are eliminated, except where there is an indication that Jointly-controlled companies are consolidated using the proportional the asset sold is impaired. Unrealised gains and losses included in the method. The Group exercises joint control when, under a contractual value of available-for-sale assets are maintained in the consolidated arrangement, strategic fi nancial and operating decisions require the fi nancial statements. unanimous consent of the parties that share control. Translation of financial statements expressed Enterprises over which the Group exercises significant influence in foreign currencies (associates) are accounted for by the equity method. Signifi cant infl uence The consolidated fi nancial statements of BNP Paribas are prepared in is the power to participate in the fi nancial and operating policy decision euros. of an enterprise without exercising control. Significant influence is The fi nancial statements of enterprises whose functional currency is presumed to exist when the Group holds, directly or indirectly, 20% or not the euro are translated using the closing rate method. Under this more of the voting power of an enterprise. Interests of less than 20% are method, all assets and liabilities, both monetary and non-monetary, are excluded from consolidation unless they represent a strategic investment translated using the spot exchange rate at the balance sheet date. Income and the Group effectively exercises signifi cant infl uence. This applies and expense items are translated at the average rate for the period. to companies developed in partnership with other groups, where the BNP Paribas Group participates in strategic decisions of the enterprise The same method is applied to the fi nancial statements of enterprises through representation on the Board of Directors or equivalent governing located in hyperinfl ationary economies, after adjusting for the effects of body, exercises infl uence over the enterprise’s operational management infl ation by applying a general price index. by supplying management systems or decision-making tools, and Differences arising from the translation of balance sheet items and profi t provides technical assistance to support the enterprise’s development. and loss items are recorded in shareholders’ equity under “Exchange Changes in the net assets of associates (companies accounted for under rates” for the portion attributable to shareholders, and in “Minority 4 the equity method) are recognised on the assets side of the balance interests” for the portion attributable to outside investors. Under the sheet under “Investments in associates” and in the relevant component optional treatment permitted by IFRS 1, the Group has reset to zero, of shareholders’ equity. Goodwill on associates is also included under by transfer to retained earnings, all cumulative translation differences “Investments in associates”. attributable to shareholders and to minority interests in the opening balance sheet at 1 January 2004. If the Group’s share of losses of an associate equals or exceeds the carrying amount of its investment in the associate, the Group discontinues On liquidation or disposal of some or all of an interest held in a foreign including its share of further losses. The investment is reported at nil enterprise located outside the euro zone, leading to a change in the value. Additional losses of the associate are provided for only to the nature of the investment (loss of control, signifi cant infl uence or joint extent that the Group has a legal or constructive obligation to do so, or control), the cumulative translation adjustment recorded in equity at the has made payments on behalf of the associate. date of the liquidation or sale is recognised in the profi t and loss account. Minority interests are presented separately in the consolidated profi t Should the percentage interest held change without any modifi cation in and loss account and balance sheet. The calculation of minority interests the nature of the investment, the translation adjustment is reallocated takes account of outstanding cumulative preferred shares classifi ed as between the portion attributable to shareholders and that attributable equity instruments and issued by subsidiaries, when such shares are to minority interests, if the enterprise is fully consolidated. For associates held outside the Group. and joint ventures, the portion related to the interest sold is recognised in the profi t and loss account. Transactions resulting in a loss of control completed prior to 1 January 2010 give rise to the recognition of a gain or loss equal to the difference between the sale price and the Group’s share in the underlying 1.b.4 Business combinations and equity. For transactions completed after 1 January 2010, the revised IAS 27 measurement of goodwill now requires any equity interest retained by the Group to be remeasured Business combinations completed prior to at its fair value through profi t or loss. 1 January 2010 Realised gains and losses on investments in consolidated undertakings Business combinations are accounted for using the purchase method. are recognised in the profi t and loss account under “Net gain on non- Under this method, the acquiree’s identifi able assets, liabilities and current assets”. contingent liabilities that meet the IFRS recognition criteria are measured at fair value at the acquisition date except for non-current assets 1.b.3 Consolidation procedures classifi ed as assets held for sale, which are accounted for at fair value less costs to sell. The Group may recognise any adjustments to the provisional The consolidated financial statements are prepared using uniform accounting within 12 months of the acquisition date. accounting policies for reporting like transactions and other events in similar circumstances. The cost of a business combination is the fair value, at the date of exchange, of assets given, liabilities assumed, and equity instruments Elimination of intragroup balances and issued to obtain control of the acquiree, plus any costs directly transactions attributable to the combination. Intragroup balances arising from transactions between consolidated enterprises, and the transactions themselves (including income, expenses
2010 Registration document and fi nancial report - BNP PARIBAS 111 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Goodwill represents the difference between the cost of the combination Testing cash-generating units for impairment and the acquirer’s interest in the net fair value of the identifi able assets, Goodwill allocated to cash-generating units is tested for impairment liabilities and contingent liabilities of the acquiree at the acquisition annually and whenever there is an indication that a unit may be impaired, date. Positive goodwill is recognised in the acquirer’s balance sheet, by comparing the carrying amount of the unit with its recoverable while negative goodwill is recognised immediately in profi t or loss, on amount. If the recoverable amount is less than the carrying amount, an the acquisition date. irreversible impairment loss is recognised, and the goodwill is written Goodwill is recognised in the functional currency of the acquiree and down by the excess of the carrying amount of the unit over its recoverable translated at the closing exchange rate. amount. When a business combination is achieved in stages (step acquisition), Recoverable amount of a cash-generating unit each stage is treated separately using the consideration transferred and The recoverable amount of a cash-generating unit is the higher of the the fair value of identifi able assets, liabilities and contingent liabilities fair value of the unit and its value in use. acquired in each stage to determine the goodwill. The change in fair value of identifi able assets, liabilities and contingent liabilities corresponding to Fair value is the price that would be obtained from selling the unit at the the previously held equity interest is recognised in other comprehensive market conditions prevailing at the date of measurement, as determined income. mainly by reference to actual prices of recent transactions involving similar entities or on the basis of stock market multiples for comparable As permitted under IFRS 1, business combinations that took place before companies. 1 January 2004 and were recorded in accordance with the previously applicable accounting standards (French GAAP), have not been restated Value in use is based on an estimate of the future cash fl ows to be in accordance with the principles set out above. generated by the cash-generating unit, derived from the annual forecasts prepared by the unit’s management and approved by Group Executive Business combinations completed after Management, and from analyses of changes in the relative positioning 4 1 January 2010 of the unit’s activities on their market. These cash fl ows are discounted IFRS 3 revised has introduced the following main changes to the policies at a rate that refl ects the return that investors would require from an described above: investment in the business sector and region involved.
■ the acquiree’s contingent liabilities are not recognised in the consolidated balance sheet unless they represent a present obligation (and not a present or possible obligation, as before) on the acquisition 1.c FINANCIAL ASSETS AND FINANCIAL date and their fair value can be reliably estimated; LIABILITIES ■ costs directly attributable to the business combination are treated as a separate transaction and recognised through profi t or loss; 1.c.1 Loans and receivables ■ any contingent consideration is included in the consideration Loans and receivables include credit provided by the Group, the Group’s transferred at its acquisition-date fair value (and no longer when share in syndicated loans, and purchased loans that are not quoted in an it is probable and can be reliably measured as before). After the active market, unless they are held for trading purposes. Loans that are measurement period of 12 months following the business combination, quoted in an active market are classifi ed as “Available-for-sale financial changes in the value of any contingent consideration recognised as a assets” and measured using the methods applicable to this category. fi nancial liability are recognised through profi t or loss; Loans and receivables are initially measured at fair value or equivalent, ■ on the acquisition date, any previously held equity interest in the which is usually the net amount disbursed at inception including directly acquiree is remeasured at its fair value through profi t or loss. In the attributable origination costs and certain types of fees or commission case of a step acquisition, the goodwill is therefore determined by (syndication commission, commitment fees and handling charges) that reference to the acquisition-date fair value and no longer by reference are regarded as an adjustment to the effective interest rate on the loan. to the fair value of the assets and liabilities acquired in each stage. Loans and receivables are subsequently measured at amortised cost. The Measurement of goodwill income from the loan, representing interest plus transaction costs and The BNP Paribas Group tests goodwill for impairment on a regular basis. fees/commission included in the initial value of the loan, is calculated using the effective interest method and taken to profi t or loss over the Cash-generating units life of the loan. The BNP Paribas Group has split all its activities into cash-generating units (1), representing major business lines. This split is consistent with the Commission earned on fi nancing commitments prior to the inception of Group’s organisational structure and management methods, and refl ects a loan is deferred and included in the value of the loan when the loan the independence of each unit in terms of results and management is made. approach. It is reviewed on a regular basis in order to take account of Commission earned on fi nancing commitments when the probability of events likely to affect the composition of cash-generating units, such as drawdown is low, or when there is uncertainty as to the timing and acquisitions, disposals and major reorganisations. amount of drawdowns, is recognised on a straight-line basis over the life of the commitment.
(1) As defi ned by IAS 36.
112 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
1.c.2 Regulated savings and loan contracts 1.c.3 Securities
Home savings accounts (Comptes Épargne-Logement – “CEL”) and home Categories of securities savings plans (Plans d’Épargne Logement – “PEL”) are government- Securities held by the Group are classifi ed into one of four categories. regulated retail products sold in France. They combine a savings phase and a loan phase which are inseparable, with the loan phase contingent Financial assets at fair value through profit or loss upon the savings phase. Financial assets at fair value through profi t or loss comprise of: These products contain two types of obligations for BNP Paribas: an ■ fi nancial assets held for trading purposes; obligation to pay interest on the savings for an indefi nite period, at a ■ rate set by the government at the inception of the contract (in the case fi nancial assets that the Group has designed, on initial recognition, at of PEL products) or at a rate reset every six months using an indexation fair value through profi t or loss using the fair value option available formula set by law (in the case of CEL products); and an obligation to lend under IAS 39. The conditions for applying the fair value option are set to the customer (at the customer’s option) an amount contingent upon out in Section 1.c.10. the rights acquired during the savings phase, at a rate set at the inception Securities in this category are measured at fair value at the balance of the contract (in the case of PEL products) or at a rate contingent upon sheet date. Transaction costs are directly posted in the profi t and loss the savings phase (in the case of CEL products). account. Changes in fair value (excluding accrued interest on fi xed- income securities) are presented in the profi t and loss account under The Group’s future obligations with respect to each generation (in the “Net gain/loss on fi nancial instruments at fair value through profi t or case of PEL products, a generation comprises all products with the same loss”, along with dividends from variable-income securities and realised interest rate at inception; in the case of CEL products, all such products gains and losses on disposal. constitute a single generation) are measured by discounting potential future earnings from at-risk outstandings for that generation. Income earned on fi xed-income securities classifi ed into this category is shown under “Interest income” in the profi t and loss account. At-risk outstandings are estimated on the basis of a historical analysis 4 of customer behaviour, and are equivalent to: Fair value incorporates an assessment of the counterparty risk on these securities. ■ for the loan phase: statistically probable loan outstandings and actual loan outstandings; Loans and receivables ■ for the savings phase: the difference between statistically probable Securities with fi xed or determinable payments that are not traded on outstandings and minimum expected outstandings, with minimum an active market, apart from securities for which the owner may not expected outstandings being deemed equivalent to unconditional term recover almost all of its initial investment due to reasons other than deposits. credit deterioration, are classifi ed as “Loans and receivables” if they do Earnings for future periods from the savings phase are estimated as the not meet the criteria to be classifi ed as “Financial assets at fair value difference between the reinvestment rate and the fi xed savings interest through profi t or loss.” These securities are measured and recognised as rate on at-risk savings outstandings for the period in question. Earnings described in Section 1.c.1. for future periods from the loan phase are estimated as the difference Held-to-maturity financial assets between the refi nancing rate and the fi xed loan interest rate on at-risk Held-to-maturity financial assets are investments with fixed or loan outstandings for the period in question. determinable payments and fixed maturity that the Group has the The reinvestment rate for savings and the refi nancing rate for loans intention and ability to hold until maturity. Hedges contracted to cover are derived from the swap yield curve and from the spreads expected assets in this category against interest rate risk do not qualify for hedge on financial instruments of similar type and maturity. Spreads are accounting as defi ned in IAS 39. determined on the basis of actual spreads on fi xed rate home loans in the Assets in this category are accounted for at amortised cost using the case of the loan phase and euro-denominated life insurance products in effective interest method, which builds in amortisation of premium and the case of the savings phase. In order to refl ect the uncertainty of future discount (corresponding to the difference between the purchase price and interest rate trends, and the impact of such trends on customer behaviour redemption value of the asset) and acquisition costs (where material). models and on at-risk outstandings, the obligations are estimated using Income earned from this category of assets is included in “Interest the Monte Carlo method. income” in the profi t and loss account. Where the sum of the Group’s estimated future obligations with respect to the savings and loan phases of any generation of contracts indicates a potentially unfavourable situation for the Group, a provision is recognised (with no offset between generations) in the balance sheet in “Provisions for contingencies and charges”. Movements in this provision are recognised as interest income in the profi t and loss account.
2010 Registration document and fi nancial report - BNP PARIBAS 113 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Available-for-sale financial assets foreign exchange risk arising on such transactions, depend on whether Available-for-sale fi nancial assets are fi xed-income and variable-income the asset or liability in question is classifi ed as a monetary or a non- securities other than those classifi ed as “fair value through profi t or loss” monetary item. or “held-to-maturity” or “loans and receivables”. Monetary assets and liabilities (1) expressed in Assets included in the available-for-sale category are initially recorded foreign currencies at fair value plus transaction costs where material. At the balance Monetary assets and liabilities expressed in foreign currencies are sheet date, they are remeasured at fair value, with changes in fair value translated into the functional currency of the relevant Group entity (excluding accrued interest) shown on a separate line in shareholders’ at the closing rate. Translation differences are recognised in the profi t equity, “Unrealised or deferred gains or losses”. Upon disposal, these and loss account, except for those arising from fi nancial instruments unrealised gains and losses are transferred from shareholders’ equity to designated as a cash fl ow hedge or a net foreign investment hedge, which the profi t and loss account, where they are shown on the line “Net gain/ are recognised in shareholders’ equity. loss on available-for-sale fi nancial assets”. Non-monetary assets and liabilities expressed in Income recognised using the effective interest method for fi xed-income foreign currencies available-for-sale securities is recorded under “Interest income” in the profi t and loss account. Dividend income from variable-income securities Non-monetary assets may be measured either at historical cost or at is recognised under “Net gain/loss on available-for-sale fi nancial assets” fair value. Non-monetary assets expressed in foreign currencies are when the Group’s right to receive payment is established. translated using the exchange rate at the date of the transaction if they are measured at historical cost, and at the closing rate if they are Repurchase agreements and securities lending/ measured at fair value. borrowing Translation differences on non-monetary assets expressed in foreign 4 Securities temporarily sold under repurchase agreements continue to currencies and measured at fair value (variable-income securities) are be recorded in the Group’s balance sheet in the category of securities recognised in the profi t and loss account if the asset is classifi ed under to which they belong. The corresponding liability is recognised in the “Financial assets at fair value through profi t or loss”, and in shareholders’ appropriate debt category on the balance sheet except in the case of equity if the asset is classifi ed under “Available-for-sale fi nancial assets”, repurchase agreements contracted for trading purposes, where the unless the fi nancial asset in question is designated as an item hedged corresponding liability is classifi ed under “Financial liabilities at fair against foreign exchange risk in a fair value hedging relationship, in value through profi t or loss”. which case the translation difference is recognised in the profi t and Securities temporarily acquired under reverse repurchase agreements loss account. are not recognised in the Group’s balance sheet. The corresponding receivable is recognised under “Loans and receivables” except in the 1.c.5 Impairment of financial assets case of reverse repurchase agreements contracted for trading purposes, where the corresponding receivable is recognised under “Financial assets Impairment of loans and receivables and held-to- at fair value through profi t or loss”. maturity financial assets, provisions for financing and guarantee commitments Securities lending transactions do not result in derecognition of the An impairment loss is recognised against loans and held-to-maturity lent securities, and securities borrowing transactions do not result in fi nancial assets where there is objective evidence of a decrease in value recognition of the borrowed securities on the balance sheet, except as a result of an event occurring after inception of the loan or acquisition in cases where the borrowed securities are subsequently sold by the of the asset; the event affects the amount or timing of future cash fl ows; Group. In such cases, the obligation to deliver the borrowed securities on and the consequences of the event can be reliably measured. Loans maturity is recognised on the balance sheet under “Financial liabilities are initially assessed for evidence of impairment on an individual basis, at fair value through profi t or loss”. and subsequently on a portfolio basis. Similar principles are applied Date of recognition for securities transactions to financing and guarantee commitments given by the Group, with the probability of drawdown taken into account in any assessment of Securities classifi ed as at fair value through profi t or loss, held-to- fi nancing commitments. maturity or available-for-sale fi nancial assets are recognised at the trade date. At an individual level, objective evidence that a fi nancial asset is impaired includes observable data ragarding the following events: Regardless of their classifi cation (at fair value through profi t or loss, loans and receivables or debt), temporary sales of securities as well as sales ■ the existence of accounts that are more than three months past of borrowed securities are initially recognised at the settlement date. due (six months past due for real estate loans and loans to local authorities); Securities transactions are carried on the balance sheet until the Group’s rights to receive the related cash fl ows expire, or until the Group has ■ knowledge or indications that the borrower meets signifi cant fi nancial substantially transferred all the risks and rewards related to ownership diffi culty, such that a risk can be considered to have arisen regardless of the securities. of whether the borrower has missed any payments; ■ concessions with respect to the credit terms granted to the borrower 1.c.4 Foreign currency transactions that the lender would not have considered had the borrower not been meeting fi nancial diffi culty. The methods used to account for assets and liabilities relating to foreign currency transactions entered into by the Group, and to measure the
(1) Monetary assets and liabilities are assets and liabilities to be received or paid in fi xed or determinable amounts of cash.
114 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
The amount of the impairment is the difference between the carrying Apart from the identifi cation criteria, the Group has determined three amount before impairment and the present value, discounted at indications of impairment, one being a signifi cant decline in price, defi ned the original effective interest rate of the asset, of those components as a fall of more than 50% of the acquisition price, another being a (principal, interest, collateral, etc.) regarded as recoverable. Changes in prolonged decline over fi ve consecutive years and the nalfi one being the amount of impairment losses recognised in profi t and loss account a decline on average of at least 30% over an observation period of one under “Cost of risk”. Any subsequent decrease in an impairment loss that year. A period of fi ve years is what the Group believes is necessary for can be related objectively to an event occurring after the impairment a moderate decline in price below the purchase cost to be considered loss was recognised is credited to the profi t and loss account, also under as something more than just the effect of random volatility inherent in “Cost of risk”. Once an asset has been impaired, income earned on the the stock markets or a cyclical change lasting a few years, but which carrying amount of the asset calculated at the original effective interest represents a lasting phenomenon justifying an impairment. rate used to discount the estimated recoverable cash fl ows is recognised A similar method is applied for unlisted variable-income securities. under “Interest income” in the profi t and loss account. In the case of fi xed-income securities, impairment is assessed based on Impairment losses on loans and receivables are usually recorded in a the same criteria applied to individually impaired loans and receivables. separate provision account which reduces the amount for which the loan or receivable was recorded in assets upon initial recognition. Provisions Impairment losses taken against variable-income securities are relating to off-balance sheet financial instruments, financing and recognised as a component of Revenues on the line “Net gain/loss on guarantee commitments or disputes are recognised in liabilities. Impaired available-for-sale fi nancial assets”, and may not be reversed through the receivables are written off in whole or in part and the corresponding profi t and loss account until these securities are sold. Any subsequent provision is reversed for the amount of the loss when all other means decline in fair value constitutes an additional impairment loss, recognised available to the Bank for recovering the receivables or guarantees have in the profi t and loss account. failed, or when all or part of the receivables have been waived. Impairment losses taken against fi xed-income securities are recognised Counterparties that are not individually impaired are risk-assessed on under “Cost of risk”, and may be reversed through the profi t and loss 4 a portfolio basis with similar characteristics. This assessment draws account in the event of an increase in fair value that relates objectively upon an internal rating system based on historical data, adjusted as to an event occurring after the last impairment was recognised. necessary to refl ect circumstances prevailing at the balance sheet date. It enables the Group to identify groups of counterparties which, as a result 1.c.6 Reclassification of financial assets of events occurring since inception of the loans, have collectively acquired The only authorised reclassifi cations of fi nancial assets are the following: a probability of default at maturity that provides objective evidence of impairment of the entire portfolio, but without it being possible at that ■ For a non-derivative fi nancial asset which is no longer held for the stage to allocate the impairment to individual counterparties. This purposes of selling it in the near-term, out of “Financial assets at fair assessment also estimates the amount of the loss on the portfolios value through profi t or loss” and into: in question, taking account of trends in the economic cycle during the ■ “Loans and receivables” if the asset meets the defi nition for this assessment period. Changes in the amount of portfolio impairments are category and the Group has the intention and ability to hold the recognised in the profi t and loss account under “Cost of risk”. asset for the foreseeable future or until maturity; or
Based on the experienced judgement of the Bank’s divisions or Risk ■ Other categories only under rare circumstances when justifi ed and Management, the Group may recognise additional collective impairment provided that the reclassifi ed assets meet the conditions applicable provisions with respect to a given economic sector or geographic area to the host portfolio. affected by exceptional economic events. This may be the case when ■ Out of “Available-for-sale fi nancial assets” and into: the consequences of these events cannot be measured with suffi cient ■ “Loans and receivables” with the same conditions as set out above accuracy to adjust the parameters used to determine the collective for “Financial assets at fair value through profi t or loss”; provision recognised against affected portfolios of loans with similar characteristics. ■ “Held-to-maturity fi nancial assets,” for assets that have a maturity, or “Financial assets at cost,” for unlisted variable-income assets. Impairment of available-for-sale financial assets Financial assets are reclassifi ed at fair value, or at the value calculated Impairment of available-for-sale fi nancial assets (which mainly comprise by a model, on the reclassifi cation date. Any derivatives embedded in securities) is recognised on an individual basis if there is objective the reclassifi ed fi nancial assets are recognised separately and changes evidence of impairment as a result of one or more events occurring in fair value are recognised through profi t or loss. since acquisition. After reclassifi cation, assets are recognised according to the provisions In the case of variable-income securities quoted in an active market, the applied to the host portfolio. The transfer price on the reclassifi cation control system identifi es securities that may be impaired on a long term date is deemed to be the initial cost of the asset for the purpose of basis and is based on criteria such as a signifi cant decline in quoted determining any impairment. price below the acquisition cost or a prolonged decline, which prompts In the event of reclassifi cation from “available-for-sale nancialfi assets” the Group to carry out an additional individual qualitative analysis. This to another category, gains or losses previously recognised through equity may lead to the recognition of an impairment loss calculated on the are amortised to profi t or loss over the residual life of the instrument basis of the quoted price. using the effective interest rate method.
2010 Registration document and fi nancial report - BNP PARIBAS 115 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Any upward revisions to the estimated recoverable amounts are 1.c.9 Derivative instruments and hedge recognised through an adjustment to the effective interest rate as of the accounting date on which the estimate is revised. Downward revisions are recognised through an adjustment to the fi nancial asset’s carrying amount. All derivative instruments are recognised in the balance sheet on the trade date at the transaction price, and are remeasured to fair value on the balance sheet date. 1.c.7 Issues of debt securities Financial instruments issued by the Group are qualified as debt Derivatives held for trading purposes instruments if the Group company issuing the instruments has a Derivatives held for trading purposes are recognised in the balance sheet contractual obligation to deliver cash or another fi nancial asset to the in “Financial assets at fair value through profi t or loss” when their fair holder of the instrument. The same applies if the Group is required to value is positive, and in “Financial liabilities at fair value through profi t exchange fi nancial assets or fi nancial liabilities with another entity under or loss” when their fair value is negative. Realised and unrealised gains conditions that are potentially unfavourable to the Group, or to deliver a and losses are recognised in the profi t and loss account on the line “Net variable number of the Group’s own equity instruments. gain/loss on fi nancial instruments at fair value through profi t or loss”. Issues of debt securities are initially recognised at the issue value Derivatives and hedge accounting including transaction costs, and are subsequently measured at amortised Derivatives contracted as part of a hedging relationship are designated cost using the effective interest method. according to the purpose of the hedge. Bonds redeemable for or convertible into equity instruments of the Group Fair value hedges are particularly used to hedge interest rate risk on are accounted for as hybrid instruments with a debt component and an fi xed rate assets and liabilities, both for identifi ed fi nancial instruments equity component, determined on initial recognition. (securities, debt issues, loans, borrowings) and for portfolios of fi nancial instruments (in particular, demand deposits and fi xed rate loans). 4 1.c.8 Own equity instruments and own equity instrument derivatives Cash fl ow hedges are particularly used to hedge interest rate risk on floating-rate assets and liabilities, including rollovers, and foreign The term “own equity instruments” refers to shares issued by the parent exchange risks on highly probable forecast foreign currency revenues. company (BNP Paribas SA) or by its fully consolidated subsidiaries. At the inception of the hedge, the Group prepares formal documentation Own equity instruments held by the Group, also known as treasury which details the hedging relationship, identifying the instrument, or shares, are deducted from consolidated shareholders’ equity irrespective portion of the instrument, or portion of risk that is being hedged, the of the purpose for which they are held. Gains and losses arising on such hedging strategy and the type of risk hedged, the hedging instrument, and instruments are eliminated from the consolidated profi t and loss account. the methods used to assess the effectiveness of the hedging relationship. When the Group acquires equity instruments issued by subsidiaries On inception and at least quarterly, the Group assesses, in consistency under the exclusive control of BNP Paribas, the difference between the with the original documentation, the actual (retrospective) and expected acquisition price and the share of net assets acquired is recorded in (prospective) effectiveness of the hedging relationship. Retrospective retained earnings attributable to BNP Paribas shareholders. Similarly, the effectiveness tests are designed to assess whether actual changes in liability corresponding to put options granted to minority shareholders the fair value or cash fl ows of the hedging instrument and the hedged in such subsidiaries, and changes in the value of that liability, are offset item are within a range of 80% to 125%. Prospective effectiveness tests initially against minority interests, with any surplus offset against retained are designed to ensure that expected changes in the fair value or cash earnings attributable to BNP Paribas shareholders. Until these options fl ows of the derivative over the residual life of the hedge adequately have been exercised, the portion of net income attributable to minority offset those of the hedged item. For highly probable forecast transactions, interests is allocated to minority interests in the profi t and loss account. effectiveness is assessed largely on the basis of historical data for similar A decrease in the Group’s interest in a fully consolidated subsidiary is transactions. recognised in the Group’s accounts as a change in shareholders’ equity. Under IAS 39 as adopted by the European Union, which excludes certain Own equity instrument derivatives are treated as follows, depending on provisions on portfolio hedging, interest rate risk hedging relationships the method of settlement: based on portfolios of assets or liabilities qualify for fair value hedge ■ as equity instruments if they are settled by physical delivery of a fi xed accounting as follows: number of own equity instruments for a fi xed amount of cash or other ■ the risk designated as being hedged is the interest rate risk associated fi nancial asset. Such instruments are not revalued; with the interbank rate component of interest rates on commercial ■ as derivatives if they are settled in cash, or by choice, depending on banking transactions (loans to customers, savings accounts and whether they are settled by physical delivery of the shares or in cash. demand deposits); Changes in value of such instruments are taken to the profi t and loss ■ the instruments designated as being hedged correspond, for each account. maturity band, to a portion of the interest rate gap associated with If the contract includes an obligation, whether contingent or not, for the the hedged underlyings; bank to repurchase its own shares, the bank must recognise the present ■ the hedging instruments used consist exclusively of “plain vanilla” value of the debt with an offsetting entry in equity. swaps;
116 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
■ prospective hedge effectiveness is established by the fact that all Embedded derivatives derivatives must, on inception, have the effect of reducing interest rate Derivatives embedded in hybrid fi nancial instruments are separated from risk in the portfolio of hedged underlyings. Retrospectively, a hedge will the value of the host contract and accounted for separately as a derivative be disqualifi ed from hedge accounting once a shortfall arises in the if the hybrid instrument is not recorded as a fi nancial asset or liability underlyings specifi cally associated with that hedge for each maturity at fair value through profi t or loss, and if the economic characteristics band (due to prepayment of loans or withdrawals of deposits). and risks of the embedded derivative are not closely related to those of The accounting treatment of derivatives and hedged items depends on the host contract. the hedging strategy. In a fair value hedging relationship, the derivative instrument is 1.c.10 Determination of fair value remeasured at fair value in the balance sheet, with changes in fair value Financial assets and liabilities classifi ed as fair value through profi t or recognise in profi t or loss in “Net gain/loss on financial instruments at loss, and fi nancial assets classifi ed as available-for-sale, are measured fair value through profi t or loss”, symmetrically with the remeasurement and accounted for at fair value upon initial recognition and at subsequent of the hedged item to refl ect the hedged risk. In the balance sheet, the dates. Fair value is defi ned as the amount for which an asset could be fair value remeasurement of the hedged component is recognised in exchanged, or a liability settled, between knowledgeable, willing parties accordance with the classifi cation of the hedged item in the case of in an arm’s length transaction. On initial recognition, the value of a a hedge of identifi ed assets and liabilities, or under “Remeasurement fi nancial instrument is generally the transaction price (i.e. the value of adjustment on interest rate risk hedged portfolios” in the case of a the consideration paid or received). portfolio hedging relationship. Fair value is determined: If a hedging relationship ceases or no longer fulfi ls the effectiveness criteria, the hedging instrument is transferred to the trading book and ■ based on quoted prices in an active market; or accounted for using the treatment applied to this category. In the case ■ using valuation techniques involving: 4 of identifi ed fi xed-income instruments, the remeasurement adjustment ■ mathematical calculation methods based on accepted fi nancial recognised in the balance sheet is amortised at the effective interest theories; and rate over the remaining life of the instrument. In the case of interest ■ parameters derived in some cases from the prices of instruments rate risk hedged fi xed-income portfolios, the adjustment is amortised traded in active markets, and in others from statistical estimates on a straight-line basis over the remainder of the original term of the or other quantitative methods resulting from the absence of an hedge. If the hedged item no longer appears in the balance sheet, in active market. particular due to prepayments, the adjustment is taken to the profi t and loss account immediately. Whether or not a market is active is determined on the basis of a variety of factors. Characteristics of an inactive market include a signifi cant In a cash fl ow hedging relationship, the derivative is measured at fair value decline in the volume and level of trading activity in identical or similar in the balance sheet, with changes in fair value taken to shareholders’ instruments, the available prices vary signifi cantly over time or among equity on a separate line, “Unrealised or deferred gains or losses”. The market participants or observed transaction prices are not current. amounts taken to shareholders’ equity over the life of the hedge are transferred to the profi t and loss account under “Net interest income” as Use of quoted prices in an active market and when the cash fl ows from the hedged item impact profi t or loss. The If quoted prices in an active market are available, they are used to hedged items continue to be accounted for using the treatment specifi c determine fair value. These represent directly quoted prices for identical to the category to which they belong. instruments. If the hedging relationship ceases or no longer fulfi ls the effectiveness criteria, the cumulative amounts recognised in shareholders’ equity as Use of models to value unquoted financial instruments a result of the remeasurement of the hedging instrument remain in equity until the hedged transaction itself impacts profi t or loss, or until The majority of over-the-counter derivatives are traded in active markets. it becomes clear that the transaction will not occur, at which point they Valuations are determined using generally accepted models (discounted are transferred to the profi t and loss account. cash fl ows, Black & Scholes model, interpolation techniques) based on quoted market prices for similar instruments or underlyings. If the hedged item ceases to exist, the cumulative amounts recognised in shareholders’ equity are immediately taken to the profi t and loss account. Some fi nancial instruments, although not traded in an active market, are valued using methods based on observable market data. Whatever the hedging strategy used, any ineffective portion of the hedge is recognised in the profi t and loss account under “Net gain/loss on These models use market parameters calibrated on the basis of fi nancial instruments at fair value through profi t or loss”. observable data such as yield curves, implicit volatility layers of options, default rates, and loss assumptions. Hedges of net foreign currency investments in subsidiaries and branches are accounted for in the same way as cash flow hedges. Hedging instruments may be currency derivatives or any other non-derivative fi nancial instrument.
2010 Registration document and fi nancial report - BNP PARIBAS 117 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
The valuation derived from models is adjusted for liquidity and credit 1.c.12 Income and expenses arising from risk. Starting from valuations derived from median market prices, financial assets and financial liabilities price adjustments are used to value the net position in each fi nancial instrument at bid price in the case of short positions, or at asking price in Income and expenses arising from fi nancial instruments measured at the case of long positions. Bid price is the price at which a counterparty amortised cost and from fi xed-income securities classifi ed in “Available- would buy the instrument, and asking price is the price at which a seller for-sale fi nancial assets” are recognised in the profi t and loss account would sell the same instrument. using the effective interest method. Similarly, a counterparty risk adjustment is included in the valuation The effective interest rate is the rate that exactly discounts estimated derived from the model in order to reflect the credit quality of the future cash fl ows through the expected life of the financial instrument derivative instrument. or, when appropriate, a shorter period, to the net carrying amount of the asset or liability in the balance sheet. The effective interest rate The margin generated when these fi nancial instruments are traded is calculation takes account of all fees received or paid that are an integral taken to the profi t and loss account immediately. part of the effective interest rate of the contract, transaction costs, and Other illiquid complex fi nancial instruments are valued using internally- premiums and discounts. developed techniques, that are entirely based on data or on partially non The method used by the Group to recognise service-related commission observable active markets. income and expenses depends on the nature of the service. Commission In the absence of observable inputs, these instruments are measured on treated as an additional component of interest is included in the effective initial recognition in a way that refl ects the transaction price, regarded interest rate, and is recognised in the profi t and loss account in “Net as the best indication of fair value. Valuations derived from these models interest income”. Commission payable or receivable on execution of a are adjusted for liquidity risk and credit risk. signifi cant transaction is recognised in the profi t and loss account in full on execution of the transaction, under “Commission income and The margin generated when these complex financial instruments 4 expense”. Commission payable or receivable for recurring services is are traded (day one profit) is deferred and taken to the profit and recognised over the term of the service, also under “Commission income loss account over the period during which the valuation parameters and expense”. are expected to remain non-observable. When parameters that were originally non-observable become observable, or when the valuation can Commission received in respect of fi nancial guarantee commitments is be substantiated in comparison with recent similar transactions in an regarded as representing the fair value of the commitment. The resulting active market, the unrecognised portion of the day one profi t is released liability is subsequently amortised over the term of the commitment, to the profi t and loss account. under commission income in Revenues. Lastly, the fair value of unlisted equity securities is measured in External costs that are directly attributable to an issue of new shares comparison with recent transactions in the equity of the company are deducted from equity net of all related taxes. in question carried out with an independent third party on an arm’s length basis. If no such points of reference are available, the valuation is 1.c.13 Cost of risk determined either on the basis of generally accepted practices (EBIT or Cost of risk includes movements in provisions for impairment of fi xed- EBITDA multiples) or of the Group’s share of net assets calculated using income securities and loans and receivables due from customers and the most recent information available. credit institutions, movements in fi nancing and guarantee commitments given, losses on irrecoverable loans and amounts recovered on loans 1.c.11 Financial assets and liabilities written off. This caption also includes impairment losses recorded with designated at fair value through profit respect to default risk incurred on counterparties for over-the-counter or loss (fair value option) financial instruments, as well as expenses relating to fraud and to The amendment to IAS 39 relating to the “fair value option” was disputes inherent to the fi nancing business. adopted by the European Union on 15 November 2005, in effect starting 1 January 2005. 1.c.14 Derecognition of financial assets and This option allows entities to designate any fi nancial asset or financial financial liabilities liability on initial recognition measured at fair value, with changes in fair The Group derecognises all or part of a fi nancial asset either when the value recognised in profi t or loss, in the following cases: contractual rights to the cash fl ows from the asset expire or when the ■ hybrid financial instruments containing one or more embedded Group transfers the contractual rights to the cash fl ows from the asset derivatives which otherwise would have been separated and accounted and substantially all the risks and rewards of ownership of the asset. for separately; Unless these conditions are fulfi lled, the Group retains the asset in its balance sheet and recognises a liability for the obligation created as a ■ where using the option enables the entity to eliminate or signifi cantly result of the transfer of the asset. reduce a mismatch in the measurement and accounting treatment of assets and liabilities that would arise if they were to be classifi ed in The Group derecognises all or part of a fi nancial liability when the liability separate categories; is extinguished in full or in part. ■ when a group of fi nancial assets and/or fi nancial liabilities is managed and measured on the basis of fair value, in accordance with a documented risk management and investment strategy.
118 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
1.c.15 Offsetting financial assets and financial The benefi ts offered relate mainly to the risk of death (term life insurance, liabilities annuities, loan repayment, guaranteed minimum on unit-linked contracts) and, for borrowers’ insurance, to disability, incapacity and unemployment A fi nancial asset and a fi nancial liability are offset and the net amount risks. These types of risks are controlled by the use of appropriate presented in the balance sheet if, and only if, the Group has a legally mortality tables (certifi ed tables in the case of annuity-holders), medical enforceable right to set off the recognised amounts, and intends either screening appropriate to the level of benefi t offered, statistical monitoring to settle on a net basis, or to realise the asset and settle the liability of insured populations, and reinsurance programmes. simultaneously. Non-life technical reserves include unearned premium reserves Repurchase agreements and derivatives traded with clearing houses that (corresponding to the portion of written premiums relating to future meet the two criteria set out in the accounting standard are offset in periods) and outstanding claims reserves, inclusive of claims handling the balance sheet. costs. The adequacy of technical reserves is tested at the balance sheet date by comparing them with the average value of future cash fl ows as derived 1.d ACCOUNTING STANDARDS SPECIFIC TO from stochastic analyses. Any adjustments to technical reserves are taken INSURANCE BUSINESS to the profi t and loss account for the period. A capitalisation reserve is set up in individual statutory accounts on the sale of amortisable The specifi c accounting policies relating to assets and liabilities generated securities in order to defer part of the net realised gain and hence by insurance contracts and fi nancial contracts with a discretionary maintain the yield to maturity on the portfolio of admissible assets. In the participation feature written by fully consolidated insurance companies consolidated fi nancial statements, the bulk of this reserve is reclassifi ed are retained for the purposes of the consolidated fi nancial statements. to “Policyholders’ surplus” on the liabilities side of the consolidated These policies comply with IFRS 4. balance sheet; a deferred tax liability is recognised on the portion taken All other insurance company assets and liabilities are accounted for using to shareholders’ equity. 4 the policies applied to the Group’s assets and liabilities generally, and This item also includes the policyholders’ surplus reserve resulting are included in the relevant balance sheet and profi t and loss account from the application of shadow accounting. This represents the interest headings in the consolidated fi nancial statements. of policyholders, mainly within French life insurance subsidiaries, in unrealised gains and losses on assets where the benefi t paid under 1.d.1 Assets the policy is linked to the return on those assets. This interest is an Financial assets and non-current assets are accounted for using the average derived from stochastic analyses of unrealised gains and losses policies described elsewhere in this note. The only exceptions are shares attributable to policyholders in various scenarios. in civil property companies (SCIs) held in unit-linked insurance contract In the event of an unrealised loss on shadow accounted assets, a portfolios, which are measured at fair value on the balance sheet date policyholders’ loss reserve is recognised on the assets side of the with changes in fair value taken to profi t or loss. consolidated balance sheet in an amount equal to the probable deduction Financial assets representing technical provisions related to unit-linked from the policyholders’ future profi t share. The recoverability of the business are shown in “Financial assets at fair value through profi t or policyholders’ loss reserve is assessed prospectively, taking account loss”, and are stated at the realisable value of the underlying assets at of policyholders’ surplus reserves recognised elsewhere, capital gains the balance sheet date. on fi nancial assets that are not shadow accounted due to accounting elections made (held-to-maturity financial assets and property 1.d.2 Liabilities investments measured at cost) and the Company’s ability and intention to hold the assets carrying the unrealised loss. The policyholders’ loss The Group’s obligations to policyholders and benefi ciaries are shown reserve is recognised symmetrically with the corresponding assets in “Technical reserves of insurance companies” and comprise liabilities and shown on the assets side of the balance sheet under the line item relating to insurance contracts carrying a signifi cant insurance risk (e.g., “Accrued income and other assets”. mortality or disability) and to fi nancial contracts with a discretionary participation feature, which are covered by IFRS 4. A discretionary 1.d.3 Profit and loss account participation feature is one which gives life policyholders the right to receive, as a supplement to guaranteed benefi ts, a share of actual profi ts. Income and expenses arising on insurance contracts written by the Group are recognised in the profi t and loss account under “Income from other Liabilities relating to other fi nancial contracts, which are covered by IAS activities” and “Expenses on other activities”. 39, are shown in “Due to customers”. Other insurance company income and expenses are included in the Unit-linked contract liabilities are measured in reference to the fair value relevant profi t and loss account item. Consequently, movements in the of the underlying assets at the balance sheet date. policyholders’ surplus reserve are shown on the same line as gains and The technical reserves of life insurance subsidiaries consist primarily losses on the assets that generated the movements. of mathematical reserves, which generally correspond to the surrender value of the contract.
2010 Registration document and fi nancial report - BNP PARIBAS 119 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
1.e PROPERTY, PLANT, EQUIPMENT AND Depreciable property, plant and equipment and intangible assets are INTANGIBLE ASSETS tested for impairment if there is an indication of potential impairment at the balance sheet date. Non-depreciable assets are tested for impairment Property, plant and equipment and intangible assets shown in the at least annually, using the same method as for goodwill allocated to consolidated balance sheet comprise on assets used in operations and cash-generating units. investment property. If there is an indication of impairment, the new recoverable amount Assets used in operations are those used in the provision of services or of the asset is compared with the carrying amount. If the asset is for administrative purposes, and include non-property assets leased by found to be impaired, an impairment loss is recognised in the profi t the Group as lessor under operating leases. and loss account. This loss is reversed in the event of a change in the Investment property comprises property assets held to generate rental estimated recoverable amount or if there is no longer an indication of income and capital gains. impairment. Impairment losses are taken to the profi t and loss account in “Depreciation, amortisation and impairment of property, plant and Property, plant and equipment and intangible assets are initially equipment and intangible assets”. recognised at purchase price plus directly attributable costs, together with borrowing costs where a long period of construction or adaptation Gains and losses on disposals of property, plant and equipment and is required before the asset can be brought into service. intangible assets used in operations are recognised in the profi t and loss account in “Net gain on non-current assets”. Software developed internally by the BNP Paribas Group that fulfi ls the criteria for capitalisation is capitalised at direct development cost, Gains and losses on disposals of investment property are recognised in which includes external costs and the labour costs of employees directly the profi t and loss account in “Income from other activities” or “Expenses attributable to the project. on other activities”. Subsequent to initial recognition, property, plant and equipment and 4 intangible assets are measured at cost less accumulated depreciation or amortisation and any impairment losses. The only exceptions are shares 1.f LEASES in civil property companies (SCIs) held in unit-linked insurance contract Group companies may either be the lessee or the lessor in a lease portfolios, which are measured at fair value on the balance sheet date, agreement. with changes in fair value taken to profi t or loss. The depreciable amount of property, plant and equipment and intangible 1.f.1 Lessor accounting assets is calculated after deducting the residual value of the asset. Only assets leased by the Group as lessor under operating leases are Leases contracted by the Group as lessor are categorised as either fi nance presumed to have a residual value, as the useful life of property, plant leases or operating leases. and equipment and intangible assets used in operations is generally the Finance leases same as their economic life. In a fi nance lease, the lessor transfers substantially all the risks and Property, plant and equipment and intangible assets are depreciated rewards of ownership of an asset to the lessee. It is treated as a loan or amortised using the straight-line method over the useful life of the made to the lessee to fi nance the purchase of the asset. asset. Depreciation and amortisation expense is recognised in the profi t and loss account under “Depreciation, amortisation and impairment of The present value of the lease payments, plus any residual value, is property, plant and equipment and intangible assets”. recognised as a receivable. The net income earned from the lease by the lessor is equal to the amount of interest on the loan, and is taken to the Where an asset consists of a number of components that may require profi t and loss account under “Interest income”. The lease payments are replacement at regular intervals, or that have different uses or different spread over the lease term, and are allocated to reduction of the principal patterns of consumption of economic benefits, each component is and to interest such that the net income refl ects a constant rate of return recognised separately and depreciated using a method appropriate to on the net investment outstanding in the lease. The rate of interest used that component. The BNP Paribas Group has adopted the component- is the rate implicit in the lease. based approach for property used in operations and for investment property. Individual and portfolio impairments of lease receivables are determined using the same principles as applied to other loans and receivables. The depreciation periods used for offi ce property are as follows: 80 years or 60 years for the shell (for prime and other property respectively); 30 Operating leases years for facades; 20 years for general and technical installations; and An operating lease is a lease under which substantially all the risks 10 years for fi xtures and fittings. and rewards of ownership of an asset are not transferred to the lessee. Software is amortised, depending on its type, over periods of no more The asset is recognised under property, plant and equipment in the than 8 years in the case of infrastructure developments and 3 years or lessor’s balance sheet and depreciated on a straight-line basis over the 5 years in the case of software developed primarily for the purpose of lease term. The depreciable amount excludes the residual value of the providing services to customers. asset. The lease payments are taken to the profi t and loss account in Software maintenance costs are expensed as incurred. However, full on a straight-line basis over the lease term. Lease payments and expenditure that is regarded as upgrading the software or extending its depreciation expenses are taken to the profi t and loss account under useful life is included in the initial acquisition or production cost. “Income from other activities” and “Expenses on other activities”.
120 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
1.f.2 Lessee accounting 1.h EMPLOYEE BENEFITS Leases contracted by the Group as lessee are categorised as either fi nance Employee benefi ts are classifi ed in one of four categories: leases or operating leases. ■ short-term benefi ts, such as salary, annual leave, incentive plans, Finance leases profi t-sharing and additional payments; ■ long-term benefi ts, including compensated absences, long-service A fi nance lease is treated as an acquisition of an asset by the lessee, awards, and other types of cash-based deferred compensation; fi nanced by a loan. The leased asset is recognised in the balance sheet of the lessee at the lower of its fair value or the present value of the ■ termination benefi ts; minimum lease payments calculated at the interest rate implicit in the ■ post-employment benefi ts, including top-up banking industry pensions lease. A matching liability, equal to the fair value of the leased asset or in France and pension plans in other countries, some of which are the present value of the minimum lease payments, is also recognised in operated through pension funds. the balance sheet of the lessee. The asset is depreciated using the same method as that applied to owned assets, after deducting the residual Short-term benefits value from the amount initially recognised, over the useful life of the asset. The lease obligation is accounted for at amortised cost. The Group recognises an expense when it has used services rendered by employees in exchange for employee benefi ts. Operating leases The asset is not recognised in the balance sheet of the lessee. Lease Long-term benefits payments made under operating leases are taken to the profi t and loss These are benefi ts, other than post-employment benefi ts and termination account of the lessee on a straight-line basis over the lease term. benefi ts, which are not settled fully within 12 months after the employees render the related service. This relates, in particular, to compensation 4 deferred for more than 12 months and not linked to the BNP Paribas 1.g NON-CURRENT ASSETS HELD FOR SALE share price, which is accrued in the fi nancial statements for the period AND DISCONTINUED OPERATIONS in which it is earned. The actuarial techniques used are similar to those used for defi ned- Where the Group decides to sell non-current assets and it is highly benefi t post-employment benefi ts, except that actuarial gains and losses probable that the sale will occur within 12 months, these assets are are recognised immediately as is the effect of any plan amendments. shown separately in the balance sheet, on the line “Non-current assets held for sale”. Any liabilities associated with these assets are also shown separately in the balance sheet, on the line “Liabilities associated with Termination benefits non-current assets held for sale”. Termination benefi ts are employee benefi ts payable as a result of a Once classifi ed in this category, non-current assets and groups of assets decision by the Group to terminate a contract of employment before the and liabilities are measured at the lower of carrying amount or fair value legal retirement age or a decision by an employee to accept voluntary less costs to sell. redundancy in exchange for these benefi ts. Termination benefi ts due more than 12 months after the balance sheet date are discounted. Such assets are no longer depreciated. If an asset or group of assets and liabilities becomes impaired, an impairment loss is recognised in the profi t and loss account. Impairment losses may be reversed. Post-employment benefits Where a group of assets and liabilities held for sale represents a major The Group draws a distinction between defi ned-contribution plans and business line, it is categorised as a “discontinued operation”. Discontinued defi ned-benefi t plans. operations include operations that are held for sale, operations that Defi ned-contribution plans do not give rise to an obligation for the have been shut down, and subsidiaries acquired exclusively with a view Group and “consequently” do not require a provision. The amount of to resale. the employer’s contributions payable during the period is recognised All gains and losses related to discontinued operations are shown as an expense. separately in the profi t and loss account, on the line “Post-tax gain/loss Only defi ned-benefi t schemes give rise to an obligation for the Group. on discontinued operations and assets held for sale”. This line includes This obligation must be measured and recognised as a liability by means the post-tax profi ts or losses of discontinued operations, the post-tax gain of a provision. or loss arising from remeasurement at fair value less costs to sell, and The classifi cation of plans into these two categories is based on the the post-tax gain or loss on disposal of the operation. economic substance of the plan, which is reviewed to determine whether the Group has a legal or constructive obligation to pay the agreed benefi ts to employees.
2010 Registration document and fi nancial report - BNP PARIBAS 121 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Post-employment benefi t obligations under defi ned-benefi t plans are Stock option and share award plans measured using actuarial techniques that take demographic and fi nancial assumptions into account. The expense related to stock option and share award plans is recognised over the vesting period, if the benefi t is conditional upon the grantee’s The amount of the obligation recognised as a liability is measured on continued employment. the basis of the actuarial assumptions applied by the Group, using the projected unit credit method. This method takes into account various Stock options and share award expenses are recorded under salaries parameters, such as demographic assumptions, the probability that and employee benefits’ account, with the credit entry is posted to employees will leave before retirement age, salary infl ation, a discount shareholders’ equity. They are calculated on the basis of the overall rate, and the general infl ation rate. The value of any plan assets is plan value, determined at the date of grant by the Board of Directors. deducted from the amount of the obligation. In the absence of any market for these instruments, fi nancial valuation When the value of the plan assets exceeds the amount of the obligation, models are used that take into account any performance conditions an asset is recognised if it represents a future economic benefi t for the related to the BNP Paribas share price. The total expense of a plan is Group in the form of a reduction in future contributions or a future partial determined by multiplying the unit value per option or share awarded by refund of amounts paid into the plan. the estimated number of options or shares awarded that will vest at the end of the vesting period, taking into account the conditions regarding The amount of the obligation under a plan and the value of the plan the grantee’s continued employment. assets may show signifi cant fl uctuations from one period to the next, due to changes in actuarial assumptions, thereby causing actuarial gains The only assumptions revised during the vesting period, and hence and losses. The Group applies the “corridor” method in accounting for resulting in a remeasurement of the expense, are those relating to actuarial gains and losses. Under this method, the Group is allowed to the probability that employees will leave the Group and those relating recognise, as of the following period and over the average remaining to performance conditions that are not linked to the price value of 4 service lives of employees, only that portion of actuarial gains and losses BNP Paribas shares. that exceeds the greater of 10% of the present value of the gross defi ned- benefi t obligation or 10% of the fair value of plan assets at the end of Share price-linked cash-settled deferred the previous period. compensation plans At the date of fi rst-time adoption, BNP Paribas elected for the exemption The expense related to these plans is recognised in the year during which allowed under IFRS 1, under which all unamortised actuarial gains and the employee rendered the corresponding services. losses at 1 January 2004 are recognised as a deduction from equity at If the payment of share-based variable compensation is explicitly subject that date. to the employee’s continued presence at the vesting date, the services The effects of plan amendments on past service costs are recognised in are presumed to have been rendered during the vesting period and the profi t or loss over the full vesting period of the amended benefi ts. corresponding compensation expense is recognised on a pro rata basis over that period. The expense is recognised under salaries and employee The annual expense recognised in the profi t and loss account under benefi ts’ account with a corresponding liability in the balance sheet. It is “Salaries and employee benefi ts”, with respect to defi ned-benefi t plans, revised to take into account any non-fulfi lment of the continued presence is comprised of the current service cost (the rights vested by each or performance conditions and the change in BNP Paribas share price. employee during the period in return for service rendered), interest cost (the effect of discounting the obligation), the expected return on plan If there is no continued presence condition, the expense is not deferred, assets, amortisation of actuarial gains and losses and past service cost but recognised immediately with a corresponding liability in the balance arising from plan amendments, and the effect of any plan curtailments sheet. This is then revised on each reporting date until settlement to or settlements. take into account any performance conditions and the change in the BNP Paribas share price.
Share subscriptions or purchases offered to 1.i SHARE-BASED PAYMENT employees under the Company Savings Plan Share-based payment transactions are payments based on shares issued Share subscriptions or purchases offered to employees under the by the Group, whether the transaction is settled in the form of equity or Company Savings Plan (Plan d’Épargne Entreprise) at lower-than- cash of which the amount is based on trends in the value of BNP Paribas market rates over a specifi ed period do not include a vesting period. shares. However, employees are prohibited by law from selling shares acquired IFRS 2 requires share-based payments granted after 7 November 2002 under this plan for a period of fi ve years. This restriction is taken into to be recognised as an expense. The amount recognised is the value of account by measuring the benefi t to the employees, which is reduced the share-based payment granted to the employee. accordingly. Therefore, the benefi t equals the difference, at the date the The Group grants employees stock subscription option plans and deferred plan is announced to employees, between the fair value of the share (after share-based or share price-linked cash-settled compensation plans, and allowing for the restriction on sale) and the acquisition price paid by the also offers them the possibility to purchase specially-issued BNP Paribas employee, multiplied by the number of shares acquired. shares at a discount, on condition that they retain the shares for a specifi ed period.
122 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
The cost of the mandatory fi ve-year holding period is equivalent to the Current and deferred taxes are recognised as tax income or expenses cost of a strategy involving the forward sale of shares subscribed at in the profi t and loss account, excepted for deferred taxes relating to the time of the capital increase reserved for employees and the cash unrealised gains or losses on available-for-sale assets or to changes in purchase of an equivalent number of BNP Paribas shares on the market, the fair value of instruments designated as cash fl ow hedges, which are fi nanced by a loan repaid at the end of a fi ve-year period out of the taken to shareholders’ equity. proceeds from the forward sale transaction. The interest rate on the When tax credits on revenues from receivables and securities are used loan is the rate that would be applied to a fi ve-year general purpose loan to settle corporate income tax payable for the period, the tax credits are taken out by an individual with an average risk profi le. The forward sale recognised on the same line as the income to which they relate. The price for the shares is determined on the basis of market parameters. corresponding tax expense continues to be carried in the profi t and loss account under “Corporate income tax”.
1.j PROVISIONS RECORDED UNDER LIABILITIES 1.l CASH FLOWS STATEMENT Provisions recorded under liabilities (other than those relating to fi nancial The cash and cash equivalents balance is composed of the net balance instruments, employee benefi ts and insurance contracts) mainly relate of cash accounts and accounts with central banks and post offi ce banks, to restructuring, claims and litigation, fi nes and penalties, and tax risks. and the net balance of interbank demand loans and deposits. A provision is recognised when it is probable that an outfl ow of resources Changes in cash and cash equivalents related to operating activities embodying economic benefi ts will be required to settle an obligation refl ect cash fl ows generated by the Group’s operations, including cash arising from a past event, and a reliable estimate can be made of the fl ows related to investment property, held-to-maturity fi nancial assets amount of the obligation. The amount of such obligations is discounted, and negotiable certifi cates of deposit. where the impact of discounting is material, in order to determine the 4 Changes in cash and cash equivalents related to investing activities refl ect amount of the provision. cash fl ows resulting from acquisitions and disposals of subsidiaries, associates or joint ventures included in the consolidated group, as well as acquisitions and disposals of property, plant and equipment excluding 1.k CURRENT AND DEFERRED TAXES investment property and property held under operating leases. The current income tax charge is determined on the basis of the tax laws Changes in cash and cash equivalents related to fi nancing activities and tax rates in force in each country in which the Group operates during refl ect the cash infl ows and outfl ows resulting from transactions with the period in which the income is generated. shareholders, cash fl ows related to bonds and subordinated debt, and debt securities (excluding negotiable certifi cates of deposit). Deferred taxes are recognised when temporary differences arise between the carrying amount of an asset or liability in the balance sheet and its tax base. Deferred tax liabilities are recognised for all taxable temporary differences 1.m USE OF ESTIMATES IN THE other than: PREPARATION OF THE FINANCIAL ■ taxable temporary differences on initial recognition of goodwill; STATEMENTS ■ taxable temporary differences on investments in enterprises under Preparation of the financial statements requires managers of core the exclusive or joint control of the Group, where the Group is able businesses and corporate functions to make assumptions and estimates to control the timing of the reversal of the temporary difference and that are refl ected in the measurement of income and expense in the profi t it is probable that the temporary difference will not reverse in the and loss account and of assets and liabilities in the balance sheet, and foreseeable future. in the disclosure of information in the notes to the fi nancial statements. Deferred tax assets are recognised for all deductible temporary This requires the managers in question to exercise their judgement and differences and unused carryforwards of tax losses only to the extent to make use of information available at the date of the preparation of that it is probable that the entity in question will generate future taxable the fi nancial statements when making their estimates. The actual future profi ts against which these temporary differences and tax losses can results from operations where managers have made use of estimates be offset. may in reality differ signifi cantly from those estimates, mainly according to market conditions. This may have a material effect on the fi nancial Deferred tax assets and liabilities are measured using the liability method, statements. using the tax rate which is expected to apply to the period when the asset is realised or the liability is settled, based on tax rates and tax laws that This applies in particular to: have been or will have been enacted by the balance sheet date of that ■ impairment losses recognised to cover credit risks inherent in banking period. They are not discounted. intermediation activities; Deferred tax assets and liabilities are offset when they arise within a ■ the use of internally-developed models to measure positions in group tax election under the jurisdiction of a single tax authority, and fi nancial instruments that are not quoted in organised markets; there is a legal right to offset.
2010 Registration document and fi nancial report - BNP PARIBAS 123 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
■ calculations of the fair value of unquoted financial instruments ■ the appropriateness of the designation of certain derivative instruments classifi ed in “Available-for-sale fi nancial assets”, “Financial assets such as cash fl ow hedges, and the measurement of hedge effectiveness; at fair value through profi t or loss” or “Financial liabilities at fair ■ estimates of the residual value of assets leased under fi nance leases or value through profi t or loss”, and more generally calculations of the operating leases, and more generally of assets on which depreciation fair value of fi nancial instruments subject to a fair value disclosure is charged net of their estimated residual value; requirement; ■ the measurement of provisions for contingencies and charges. ■ whether a market is active or inactive for the purposes of using a This is also the case for assumptions applied to assess the sensitivity valuation technique; of each type of market risk and the sensitivity of valuations to non- ■ impairment losses on variable-income fi nancial assets classifi ed as observable parameters. “available-for-sale”; ■ impairment tests performed on intangible assets;
Note 2 NOTES TO THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2010
2.a NET INTEREST INCOME interest) is recognised under “Net gain/loss on fi nancial instruments at 4 fair value through profi t or loss”. The BNP Paribas Group includes in “Interest income” and “Interest expense” all income and expense from fi nancial instruments measured Interest income and expense on derivatives accounted for as fair value at amortised cost (interest, fees/commissions, transaction costs), and hedges are included with the revenues generated by the hedged item. from fi nancial instruments measured at fair value that do not meet Similarly, interest income and expense arising from derivatives used to the defi nition of a derivative instrument. These amounts are calculated hedge transactions designated as at fair value through profi t or loss using the effective interest method. The change in fair value on fi nancial is allocated to the same accounts as the interest income and expense instruments at fair value through profit or loss (excluding accrued relating to the underlying transactions.
Year to 31 Dec. 2010 Year to 31 Dec. 2009 In millions of euros Income Expense Net Income Expense Net Customer items 28,933 (8,515) 20,418 27,918 (8,682) 19,236 Deposits, loans and borrowings 26,900 (8,044) 18,856 25,955 (8,169) 17,786 Repurchase agreements 145 (209) (64) 204 (367) (163) Finance leases 1,888 (262) 1,626 1,759 (146) 1,613 Interbank items 2,855 (3,499) (644) 3,120 (3,894) (774) Deposits, loans and borrowings 2,634 (2,973) (339) 2,855 (3,388) (533) Repurchase agreements 221 (526) (305) 265 (506) (241) Debt securities issued - (3,320) (3,320) - (4,215) (4,215) Cash fl ow hedge instruments 3,251 (2,909) 342 1,896 (1,832) 64 Interest rate portfolio hedge instruments 1,299 (2,822) (1,523) 1,045 (2,906) (1,861) Trading book 4,080 (2,263) 1,817 6,576 (3,910) 2,666 Fixed-income securities 2,586 - 2,586 3,481 - 3,481 Repurchase agreements 1,081 (1,210) (129) 2,775 (2,430) 345 Loans / Borrowings 413 (539) (126) 320 (895) (575) Debt securities - (514) (514) - (585) (585) Available-for-sale fi nancial assets 6,258 - 6,258 5,142 - 5,142 Held-to-maturity fi nancial assets 712 - 712 763 - 763 TOTAL INTEREST INCOME/(EXPENSE) 47,388 (23,328) 24,060 46,460 (25,439) 21,021
124 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Interest income on individually impaired loans amounted to EUR 572 Net commission income related to trust and similar activities through million in the year ended 31 December 2010 compared with EUR 567 which the Group holds or invests assets on behalf of clients, trusts, million in the year ended 31 December 2009. pension and personal risk funds or other institutions amounted to EUR The amount related to hedges of future income previously recognised 2,451 million in 2010, compared with EUR 2,215 million in 2009. in the “Changes in assets and liabilities recognised directly in equity” but recognised in the profi t and loss account in 2010 is a net gain of EUR 28 million (versus a net gain of EUR 28 million in the year ended 2.c NET GAIN/LOSS ON FINANCIAL 31 December 2009). INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS Net gain/loss on fi nancial instruments at fair value through profi t or 2.b COMMISSION INCOME AND EXPENSE loss includes all profi t and loss items relating to nancialfi instruments Commission income and expense on fi nancial instruments, which are managed in the trading book and financial instruments (including not measured at fair value through profi t or loss amounted to EUR 3,438 dividends) that the Group has designated as at fair value through profi t or million and EUR 554 million respectively in 2010, compared with income loss under the fair value option, other than interest income and expense of EUR 3,097 million and expense of EUR 447 million in 2009. which are recognised in “Net interest income” (note 2.a).
In millions of euros Year to 31 Dec. 2010 Year to 31 Dec. 2009 Trading book 3,670 7,698 Debt instruments 1,657 2,715 4 Equity instruments (1) 1,303 4,526 Other derivatives 734 687 Repurchase agreements (24) (230) Financial instruments designated at fair value through profi t or loss 524 (3,058) Impact of hedge accounting 27 26 Fair value hedges (322) 660 Hedged items in fair value hedge 349 (634) Remeasurement of currency positions 888 1,419 TOTAL 5,109 6,085 (1) equity-linked certifi cates are included under equity instruments.
Net gains on the trading book in 2010 and 2009 include a non-material amount related to the ineffective portion of cash fl ow hedges.
2.d NET GAIN/LOSS ON AVAILABLE-FOR-SALE FINANCIAL ASSETS AND OTHER FINANCIAL ASSETS NOT MEASURED AT FAIR VALUE In millions of euros Year to 31 Dec. 2010 Year to 31 Dec. 2009 Loans and receivables, fi xed-income securities (1) 372 266 Disposal gains and losses 372 266 Equities and other variable-income securities 80 170 Dividend income 430 488 Additions to impairment provisions (730) (1,223) Net disposal gains 380 905 TOTAL 452 436 (1) Interest income from fi xed-income fi nancial instruments is included in “Net interest income” (note 2.a), and impairment losses related to potential issuer default are included in “Cost of risk” (note 2.f).
Unrealised gains and losses, previously recorded under “Change in assets and liabilities recognised directly in shareholders’ equity” and included in the pre-tax income, amounted to a net gain of EUR 99 million for the year ended 31 December 2010 compared with a loss of EUR 44 million for the year ended 31 December 2009.
2010 Registration document and fi nancial report - BNP PARIBAS 125 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
2.e NET INCOME FROM OTHER ACTIVITIES Year to 31 Dec. 2010 Year to 31 Dec. 2009 In millions of euros Income Expense Net Income Expense Net Net income from insurance activities 21,497 (18,088) 3,409 21,085 (18,004) 3,081 Net income from investment property 1,577 (787) 790 1,556 (700) 856 Net income from assets held under operating leases 5,133 (3,971) 1,162 4,552 (3,802) 750 Net income from property development activities 191 (48) 143 168 (49) 119 Other income and expense 1,987 (1,718) 269 1,420 (1,044) 376 TOTAL NET INCOME FROM OTHER ACTIVITIES 30,385 (24,612) 5,773 28,781 (23,599) 5,182
➤ NET INCOME FROM INSURANCE ACTIVITIES
In millions of euros Year to 31 Dec. 2010 Year to 31 Dec. 2009 Gross premiums written 18,691 16,876 Movement in technical reserves (7,608) (10,075) 4 Claims and benefi ts expense (8,996) (7,516) Reinsurance ceded, net (292) (162) Change in value of admissible investments related to unit-linked business 1,412 3,864 Other income and expense 202 94 TOTAL NET INCOME FROM INSURANCE ACTIVITIES 3,409 3,081
“Claims and benefi ts expense” includes expenses arising from surrenders, 2.f COST OF RISK maturities and claims relating to insurance contracts. “Movement in “Cost of risk” represents the net amount of impairment losses recognised technical reserves” refl ects changes in the value of financial contracts, in respect to credit risks inherent in the Group’s banking intermediation in particular unit-linked contracts. Interest paid on such contracts is activities, plus any impairment losses in the cases of known counterparty recognised in “Interest expense”. risks on over-the-counter fi nancial instruments.
➤ Cost of risk for the period
In millions of euros Year to 31 Dec. 2010 Year to 31 Dec. 2009 Net additions to impairment provisions (4,594) (8,161) Recoveries on loans and receivables previously written off 393 420 Irrecoverable loans and receivables not covered by impairment provisions (601) (628) TOTAL COST OF RISK FOR THE PERIOD (4,802) (8,369)
➤ Cost of risk for the period by asset type
In millions of euros Year to 31 Dec. 2010 Year to 31 Dec. 2009 Loans and receivables due from credit institutions 105 12 Loans and receivables due from customers (4,921) (7,818) Available-for-sale fi nancial assets 131 (200) Financial instruments on trading activities (167) (130) Other assets 70 (7) Off-balance sheet commitments and other items (20) (226) TOTAL COST OF RISK FOR THE PERIOD (4,802) (8,369)
126 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
➤ PROVISIONS FOR IMPAIRMENT: CREDIT RISKS
➤ Movement in impairment provisions during the period
In millions of euros Year to 31 Dec. 2010 Year to 31 Dec. 2009 TOTAL IMPAIRMENT PROVISIONS AT START OF PERIOD 28,800 17,216 Net additions to impairment provisions 4,594 8,161 Impact of the consolidation of Fortis - 6,715 Utilisation of impairment provisions (3,254) (3,256) Effect of exchange rate movements and other items (357) (36) TOTAL IMPAIRMENT PROVISIONS AT END OF PERIOD 29,783 28,800
➤ Impairment provision by asset type
In millions of euros 31 December 2010 31 December 2009 Impairment of assets Loans and receivables due from credit institutions (note 5.f) 994 1,028 Loans and receivables due from customers (note 5.g) 26,671 25,369 Financial instruments on trading activities 528 651 4 Available-for-sale fi nancial assets (note 5.c) 454 432 Other assets 41 67 TOTAL IMPAIRMENT PROVISIONS AGAINST FINANCIAL ASSETS 28,688 27,547 Provisions recognised as liabilities Provisions for off-balance sheet commitments to credit institutions 612 to customers 600 818 Other items subject to provisions 489 423 TOTAL PROVISIONS RECOGNISED AS LIABILITIES 1,095 1,253 TOTAL IMPAIRMENT PROVISIONS 29,783 28,800
2.g CORPORATE INCOME TAX
Reconciliation of income tax expense to theoretical tax expense Year to 31 Dec. 2010 Year to 31 Dec. 2009 at standard tax rate in France (1) in millions of euros Tax rate in millions of euros Tax rate Corporate income at standard tax rate expense in France (2) (4,418) 34.4% (2,950) 34.4% Differential effect in tax rates applicable to foreign entities 286 -2.2% 107 -1.2% Effect of dividends and asset disposals taxed at reduced rate 3 - 250 -2.9% Tax effect linked to the capitalisation of tax loss carryforwards and prior temporary differences 80 -0.6% 78 -0.9% Tax effect of using prior tax losses not capitalised 60 -0.5% 28 -0.3% Other items 133 -1.0% (39) 0.4% Corporate income tax expense (3,856) 30.1% (2,526) 29.5% Of which Current tax expense for the year to 31 December (2,284) (2,327) Deferred tax expense for the year to 31 December (note 5.j) (1,572) (199) (1) Including 3.3% social security contribution tax calculated on French corporate tax at 33.33% lifting it to 34.43%. (2) Restated for the share of income from companies accounted for under the equity method and goodwill amortisation.
2010 Registration document and fi nancial report - BNP PARIBAS 127 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Note 3 SEGMENT INFORMATION
The Group is composed of three core businesses: the BNP Paribas Group. To make it comparable to the 2010 fi gures, the 2009 data has been restated as if these transfers had taken place on ■ Retail Banking, which covers French retail banking (FRB), Italian the acquisition date. Retail Banking (BNL banca commerciale) and the new personal and business retail banking entity in Belgium and Luxembourg (Belux Other activities mainly include Principal Investments, the Klépierre Retail Banking), the Group’s new domestic markets. It also includes property investment company, and the Group’s corporate functions. retail fi nancial services, which is split into two sub-divisions: Personal They also include non-recurring items resulting from applying the Finance providing credit solutions to private individuals and Equipment rules on business combinations to the Fortis Group acquisition and Solutions providing credit and other services to corporates. It also the acquisition of a controlling interest in Findomestic SPA. In order to includes retail banking activities in the United States (BancWest) and provide consistent economic and relevant information for each area of in emerging markets; operations, the exceptional gain refl ecting the negative goodwill arising ■ Investment Solutions (IS), which includes Private Banking; Investment in 2009 on the combination (see note 8.d), the impact of amortising fair Partners – covering all of the Group’s Asset Management businesses; value adjustments recognised in the net equity of entities acquired and Personal Investors – providing private individuals with independent restructuring costs incurred in respect to the Fortis Group integration financial advice and investment services; Securities Services to and in Italy have been allocated to this segment. management companies, fi nancial institutions and other corporations; Inter-segment transactions are conducted at arm’s length. The segment and Insurance and Real Estate Services; information presented comprises agreed inter-segment transfer prices. ■ Corporate and Investment Banking (CIB), which includes Advisory 4 & Capital Markets (Equities and Equity Derivatives, Fixed Income & This capital allocation is carried out on the basis of risk exposure, taking Forex, Corporate Finance) and Financing (Specialised and Structured into account various assumptions relating primarily to the capital Financing) businesses. requirement of the business as derived from the risk-weighted asset calculations required under capital adequacy rules. Normalised equity As part of the integration plan for the Fortis Group entities acquired, income by business segment is determined by attributing to each the business activities of BNP Paribas-Fortis and BGL BNP Paribas have segment the income of its allocated equity. been transferred to the corresponding business lines and divisions of
128 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
INFORMATION BY BUSINESS SEGMENT ➤ INCOME BY BUSINESS SEGMENT
Year to 31 Dec. 2010 Year to 31 Dec. 2009 Non- Non- Operating Cost of Operating operating Pre-tax Operating Cost of Operating operating Pre-tax In millions of euros Revenues expense risk income items income Revenues expense risk income items income Retail Banking French retail Banking (1) 6,609 (4,418) (482) 1,709 1 1,710 6,247 (4,249) (515) 1,483 1 1,484 BNL banca commerciale (1) 3,026 (1,776) (817) 433 (1) 432 2,975 (1,780) (671) 524 - 524 BeLux Retail Banking (1) 3,250 (2,343) (222) 685 3 688 1,931 (1,444) (352) 135 (4) 131 Personal Finance 5,050 (2,324) (1,921) 805 88 893 4,340 (2,068) (1,938) 334 92 426 Other Retail Banking activities 5,668 (3,458) (1,140) 1,070 14 1,084 5,209 (3,101) (2,371) (263) 10 (253) Investment Solution 6,163 (4,365) 16 1,814 168 1,982 5,363 (3,835) (41) 1,487 (24) 1,463 4 Corporate and Investment Banking Advisory & Capital Markets 7,630 (4,760) (307) 2,563 14 2,577 9,921 (4,747) (940) 4,234 (2) 4,232 Financing 4,368 (1,682) (7) 2,679 49 2,728 3,576 (1,427) (1,533) 616 18 634 Other Activities 2,116 (1,391) 78 803 123 926 629 (689) (8) (68) 427 359 TOTAL GROUP 43,880 (26,517) (4,802) 12,561 459 13,020 40,191 (23,340) (8,369) 8,482 518 9,000 (1) French Retail Banking, BNL banca commerciale and BeLux Retail Banking after the reallocation within Investment Solutions of one-third of the Private Banking activities in France, Italy and Belgium.
2010 Registration document and fi nancial report - BNP PARIBAS 129 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
➤ ASSETS AND LIABILITIES BY BUSINESS SEGMENT
For most Group entities, the segmental allocation of assets and liabilities is based on the core business to which they report, with the exception of the key ones, which are broken down or allocated specifi cally on the basis of risk-weighted assets.
31 December 2010 31 December 2009 In millions of euros Assets Liabilities Assets Liabilities Retail Banking French retail Banking 155,770 149,999 140,286 136,173 BNL banca commerciale 88,464 81,957 77,855 72,405 BeLux Retail Banking 98,318 95,590 66,487 56,632 Personal Finance 91,888 85,600 84,653 79,332 Other activities Retail Banking 131,372 118,740 140,628 130,099 Investment Solution 227,962 219,366 196,667 189,734 Corporate and Investment Banking 1,083,280 1,069,487 1,242,025 1,232,845 Other Activities 121,104 177,419 109,097 160,478 TOTAL GROUP 1,998,158 1,998,158 2,057,698 2,057,698 4 Information by business segment relating to companies accounted for INFORMATION BY GEOGRAPHIC AREA under the equity method and goodwill amortisation in the period is The geographic split of segment results, assets and liabilities is based presented respectively in note 5.l Investments in Associates and note 5.n on the region in which they are recognised for accounting purposes and Goodwill. does not necessarily refl ect the counterparty’s nationality or the location of operations.
➤ REVENUES BY GEOGRAPHIC AREA
In millions of euros Year to 31 Dec. 2010 Year to 31 Dec. 2009 France 15,300 13,824 Other European Countries 19,270 16,984 Americas 5,664 5,763 Asia - Oceania 2,036 1,919 Other countries 1,610 1,701 TOTAL 43,880 40,191
➤ ASSETS AND LIABILITIES BY GEOGRAPHIC AREA
In millions of euros 31 December 2010 31 December 2009 France 959,561 953,332 Other European Countries 677,218 722,068 Americas 206,693 222,992 Asia - Oceania 123,075 125,747 Other countries 31,611 33,559 TOTAL 1,998,158 2,057,698
130 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Note 4 RISK MANAGEMENT AND CAPITAL ADEQUACY
As a follow up of Basel II Pillar 3 implementation, which introduced new GRM covers risks resulting from the Group’s business operations. It requirements concerning risk transparency, BNP Paribas has decided to intervenes at all levels in the risk taking and monitoring process. Its remit combine the information about the Group required under IFRS 7 and Pillar includes formulating recommendations concerning risk policies, analysing 3, in order to ensure maximum consistency and clarity. the loan portfolio on a forward-looking basis, approving corporate loans and trading limits, guaranteeing the quality and effectiveness of The Group calculates the risks related to its banking activities using monitoring procedures, defi ning and/or validating risk measurement methods approved by the French banking supervisor under Pillar 1. The methods, and producing comprehensive and reliable risk reporting data scope covered by the methods (called the “prudential scope”) is discussed for Group management. GRM is also responsible for ensuring that all the in note 8.b, “Scope of consolidation.” risk implications of new businesses or products have been adequately A signifi cant event of 2009 was the fi rst-time consolidation of the Fortis evaluated. These evaluations are performed jointly by the sponsoring Group entities acquired by BNP Paribas and the launch of convergence business line and all the functions concerned (Group Tax Department, work on the rating systems applied within the BNP Paribas Group. The Group Legal Department, Group Development and Finance Department, convergence of methodologies is subject to a procedure worked out Group Compliance Department and Information Technology and Processes with the Autorité de Contrôle Prudentiel, whereby the French supervisor Department). The quality of the validation process is overseen by GRM (“home”) has to approve common methodologies jointly with its local which reviews identifi ed risks and the resources deployed to mitigate counterparts (“hosts”), principally the Belgian and Luxemburgish them, as well as defi ning the minimum criteria to be met to ensure supervisors. Pending completion of the convergence work, the Group that growth is based on sound business practices. GC has identical applies thus a hybrid approach to calculate risk-weighted assets based, responsibilities as regards operational and reputation risk. It plays an 4 depending on the relevant scope, on methods validated by the regulators important oversight and reporting role in the process of validating new in France, Belgium and Luxembourg. products, new business activities and exceptional transactions. The information presented in this note refl ects all the risks carried by the Group, which are measured as consistently as possible. In addition to the regulatory-required information about its banking 4.b RISKS CATEGORIES risks, BNP Paribas has provided information about the risks related to The risk categories reported by BNP Paribas evolve in line with its insurance business, which is given in note 4.i, “Insurance risks”. methodological developments and regulatory requirements. All the risk categories discussed below are managed by BNP Paribas. However, no specifi c capital requirement is identifi ed for reputation and 4.a RISK MANAGEMENT ORGANISATION strategy risk as these are risks that may lead to a change in share price Risk management is key in the business of banking. At BNP Paribas, which is borne directly by the shareholders and cannot be protected by operating methods and procedures throughout the organisation are the Bank’s capital. geared towards effectively addressing this matter. The entire process Reputation risk is thus contingent on other risks and, apart from market is supervised primarily by the Group Risk Management Department rumours leading to a change in share price, its impacts are included in (GRM), which is responsible for measuring and controlling risks at Group estimated losses incurred for other risk categories. level. GRM is independent from the core businesses, business lines and Similarly, strategy risk arising from the strategic decisions published by territories and reports directly to Group Executive Management. The the Bank, which could give rise to a change in share price, is a matter for Group Compliance (GC) function monitors the operational risk under the highest level of governance and is the shareholder’s responsibility. the authority of GRM, which is responsible for all the risk management procedures, and the reputation risk as part of its permanent control The implementation of regulatory defi nitions in accordance with the Basel responsibilities. Accord (International Convergence of Capital Measurement and Capital Standard), or Basel II, is discussed in parts 4.d to 4.f of this section. While front-line responsibility for managing risks lies with the divisions and business lines that propose the underlying transactions, GRM is responsible for providing assurance that the risks taken by the Bank Credit and counterparty risk comply and are compatible with its risk policies and its profi tability Credit risk is the risk of incurring a loss on loans and receivables (existing and rating objectives. GRM, and GC for operational and reputation risk, or potential due to commitments given) resulting from a change in the perform continuous, generally ex-ante controls that are fundamentally credit quality of the Bank’s debtors, which can ultimately result in different from the periodic, ex-post examinations of the Internal Auditors. default. The probability of default and the expected recovery on the loan GRM reports regularly to the Internal Control, Risk and Compliance or receivable in the event of default are key components of the credit Committee of the Board on its main fi ndings, as well as on the methods quality assessment. used by GRM to measure these risks and consolidate them on a Group- wide basis. GC reports to the Committee on issues relevant to its remit, Credit risk is measured at portfolio level, taking into account correlations particularly those concerning operational risk, fi nancial security, between the values of the loans and receivables making up the portfolio reputation risk and permanent controls. concerned.
2010 Registration document and fi nancial report - BNP PARIBAS 131 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Counterparty risk is the manifestation of credit risk in market, investment Operational risk and/or payment transactions that potentially expose the Bank to the risk of default by the counterparty. It is a bilateral risk on a counterparty Operational risk is the risk of incurring a loss due to inadequate or with whom one or more market transactions have been concluded. The failed internal processes, or due to external events, whether deliberate, amount of this risk may vary over time in line with market parameters accidental or natural occurrences. Management of operational risk is that impact the value of the relevant market instrument. based on an analysis of the “cause – event – effect” chain. Internal processes giving rise to operational risk may involve employees Market risk and/or IT systems. External events include, but are not limited to fl oods, fi re, earthquakes and terrorist attacks. Credit or market events such as Market risk is the risk of incurring a loss of value due to adverse trends default or fl uctuations in value do not fall within the scope of operational in market prices or parameters, whether directly observable or not. risk. Observable market parameters include, but are not limited to, exchange Operational risk encompasses human resources risks, legal risks, tax rates, interest rates, prices of securities and commodities (whether listed risks, information system risks, misprocessing risks, risks related to or obtained by reference to a similar asset), prices of derivatives, prices published fi nancial information and the fi nancial implications resulting of other goods, and other parameters that can be directly inferred from from reputation and compliance risks. them, such as credit spreads, volatilities and implied correlations or other similar parameters. Compliance and reputation risk Non-observable factors are those based on working assumptions such According to French regulation, compliance risk is the risk of legal, as parameters contained in models or based on statistical or economic administrative or disciplinary sanctions, together with the signifi cant analyses, non confi rmed by market informations. fi nancial loss that a bank may suffer as a result of its failure to comply with all the laws, regulations, codes of conduct and standards of Liquidity is an important component of market risk. In times of limited good practice applicable to banking and fi nancial activities (including 4 or no liquidity, instruments or goods may not be tradable or may not be instructions given by an executive body, particularly in application of tradable at their estimated value. This may arise, for example, due to low guidelines issued by a supervisory body). transaction volumes, legal restrictions or a strong imbalance between demand and supply for certain assets. By defi nition, this risk is a sub-category of operational risk. However, as certain implications of compliance risk involve more than a purely fi nancial loss and may actually damage the institution’s reputation, the Bank treats compliance risk separately. Reputation risk is the risk of damaging the trust placed in a corporation by its customers, counterparties, suppliers, employees, shareholders, regulators and any other stakeholder whose trust is an essential condition for the corporation to carry out its day-to-day operations. Reputation risk is primarily contingent on all the other risks borne by the Bank.
132 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Additional information about risk definitions Although a lot of material has been written on the classification of banking risks, and industry regulations have produced a number of widely accepted definitions, there is still no comprehensive account of all of the risks to which banks are exposed. A good deal of progress has nevertheless been made in understanding the precise nature of risks and how they interact. The interaction between these risks has not yet been quantified, but is captured by global stress scenarios. The following comments review the Group’s latest conceptual developments.
■ Market risk and credit/counterparty risk In Fixed Income trading books, credit instruments are valued on the basis of bond yields and credit spreads, which represent market parameters in the same way as interest rates or exchange rates. The credit risk arising on the issuer of the debt instrument is therefore a component of market risk known as issuer risk. Issuer risk is different from counterparty risk. In the case of credit derivatives, issuer risk corresponds to the credit risk on the underlying asset, whereas counterparty risk represents the credit risk on the third party with whom the derivative was contracted. Counterparty risk is a credit risk, while issuer risk is a component of market risk.
■ Operational risk, credit risk and market risk Operational risk arises from inadequate or failed internal processes of all kinds, ranging from loan origination and market risk-taking to transaction execution and risk oversight. However, human decisions taken in compliance with applicable rules and regulations cannot give rise to operational risk, even when they involve an error of judgment. Residual risk, defined by internal control regulations as the risk that credit risk mitigation techniques prove less efficient than expected, is 4 considered to derive from an operational failure and is therefore a component of operational risk.
Asset-liability management risk Breakeven risk Asset-liability management risk is the risk of incurring a loss as a result Breakeven risk is the risk of incurring an operating loss due to a change of mismatches in interest rates, maturities or nature between assets and in the economic environment leading to a decline in revenue coupled liabilities. For banking activities, asset-liability management risk arises with insuffi cient cost-elasticity. in non-trading portfolios and primarily relates to global interest rate risk. For insurance activities, it also includes the risk of mismatches Strategy risk arising from changes in the value of shares and other assets (particularly property) held by the general insurance fund. Strategy risk is the risk that the Bank’s share price may fall because of its strategic decisions. Liquidity and refinancing risk Concentration risk Liquidity and refi nancing risk is the risk of the Bank being unable to fulfi l its obligations at an acceptable price in a given place and currency. Concentration risk and its corollary, diversifi cation effects, are embedded within each risk, especially for credit, market and operational risks using the correlation parameters taken into account by the corresponding risk Insurance subscription risk models. Insurance subscription risk corresponds to the risk of a fi nancial loss It is assessed at consolidated Group level and at fi nancial conglomerate caused by an adverse trend in insurance claims. Depending on the type level. of insurance business (life, personal risk or annuities), this risk may be statistical, macro-economic or behavioural, or may be related to public health issues or natural disasters. It is not the main risk factor arising in the life insurance business, where fi nancial risks are predominant.
2010 Registration document and fi nancial report - BNP PARIBAS 133 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Summary of risks
➤ RISKS MONITORED BY THE BNP PARIBAS GROUP
Pillar 1 ICAAP (4) (Pillar 2) Measurement Risks affecting and Additional risk Risks affecting the Group’s value Risk Measurement Risk management identifi ed by the Group’s capital adequacy (share price) covered method covered method BNP Paribas Credit and counterparty risk ✓ Basel II ✓ Internal Model
Equity risk ✓ Basel II ✓ Internal Model Operational risk ✓ Basel II ✓ Internal Model Market risk ✓ Basel II ✓ Internal Model Concentration risk (1) ✓ Internal Model Asset & liability management risk (2) ✓ Internal Model Breakeven risk ✓ Internal Model Insurance risks (3), including insurance 4 subscription risks Internal Model ✓ Procedures; Strategy risk ✓ market multiples Quantitative and qualitative rules; Liquidity and Refi nancing risk ✓ stress tests Reputation risk ✓ Procedures (1) Concentration risk is managed within credit risk at BNP Paribas (2) Asset & liability management risk comes under what the banking supervisors call global interest rate risk (3) Insurance risks are not included in the scope of banking activities; insurance businesses are exposed to market risk, operational risk and insurance subscription risk (4) Internal Capital Adequacy Assessment Process
The capital requirements for risks monitored under Pillar 1 are included BNP Paribas continues to fi ne-tune its internal model for measuring in the capital adequacy ratio calculation. economic capital requirements, linked to its activities. It is also in the process of identifying the risks it believes should not be covered by a The ARC (All Reportings on Capital) system consolidates all capital capital requirement but governed by appropriate management and calculations produced by the risk management and accounting functions. control procedures. As a result of its analysis, the Group drew up the It generates and circulates capital reports both for internal and external risk typology chart shown in the table above. communication purposes. This internal assessment system is regularly integrated into the Group’s Internal Capital Adequacy Assessment Process decision-making and management processes and supported, where (ICAAP) appropriate, by impact analyses of crisis scenarii on business plans and The second pillar of the Basel II capital framework prescribes how by internal models notably refl ecting concentrations and diversifi cations supervisory authorities and banks can effectively assess the appropriate in an economic manner. The tool is developed at Group level. level of regulatory capital. The assessment must cover all the risks incurred by the Group, their sensitivity to crisis scenarios, and how they are expected to evolve in light of changes in the Group’s business going forward.
134 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Risk factors measures in response to the recent fi nancial crisis, including the “Basel III” framework proposed by the Basel Committee in December 2009 Risks Related to the Bank and its Industry and the Dodd-Frank Act enacted in the United States in July 2010. The Diffi cult market and economic conditions could in the future have a analysis and interpretation of these measures, which are drawn from material adverse effect on the operating environment for fi nancial various and sometimes contradictory sources, may increase compliance institutions and hence on the Bank’s fi nancial condition, results of risk. Implementation of these new measures and compliance with operations and cost of risk. them will increase the Bank’s costs and its regulatory capital and liquidity requirements and could limit its ability to conduct certain As a global fi nancial institution, the Bank’s businesses are highly sensitive types of activities. Specifically, the Dodd-Frank Act increases the to changes in fi nancial markets and economic conditions generally in oversight powers of U.S regulators over domestic and foreign fi nancial Europe, the United States and elsewhere around the world. The Bank institutions considered as systemically signifi cant, and organizes an could be confronted with a significant deterioration of market and orderly liquidation process in the event of a failure of a systemically economic conditions resulting, among other things, from crises affecting signifi cant fi nancial institution, thereby in principle ending the “too big capital, credit or liquidity markets, regional or global recessions, sharp to fail” doctrine. These measures could also substantially affect the fl uctuations in commodity prices (including oil), currency exchange rates Bank’s competitiveness, its ability to attract and retain talent and its or interest rates, infl ation or defl ation, sovereign debt rating downgrades, profi tability, particularly with respect to its investment banking and restructurings or defaults, or adverse geopolitical events (such as natural fi nancing businesses, which would in turn have an adverse effect on disasters, acts of terrorism and military confl icts). Market disruptions its business, fi nancial condition, and results of operations. Finally, it is and sharp economic downturns, which may develop quickly and hence diffi cult to predict what impact these measures would have on fi nancial not be fully hedged, could affect the operating environment for fi nancial market conditions and thus indirectly on the Bank and it is uncertain institutions for short or extended periods and have a material adverse whether they would prevent or limit possible future fi nancial crises. effect on the Bank’s fi nancial condition, results of operations or cost of risk. A number of the exceptional measures taken by governments, central 4 banks and regulators to remedy the fi nancial crisis, stabilize nancialfi European markets have recently experienced signifi cant disruptions as a markets and bolster fi nancial institutions have recently been or will soon result of concerns regarding the ability of certain countries in the euro- be completed or stopped, which, given the relatively fragile economic zone to refi nance their debt obligations and of the financial assistance recovery, could adversely affect operating conditions for banks. provided to certain European Union member states. These disruptions have contributed to increased volatility in the exchange rate of the euro In response to the fi nancial crisis, governments, central banks and against other major currencies, affected the levels of stock market indices regulators implemented measures intended to support financial and created uncertainty regarding the near-term economic prospects institutions and thereby stabilize fi nancial markets. Central banks took of countries in the European Union as well as the quality of bank loans measures to facilitate fi nancial institutions’ access to credit and liquidity, to sovereign debtors in the European Union. There has also been an in particular by lowering interest rates to historic lows for a prolonged indirect impact on fi nancial markets worldwide. If economic conditions period. Various central banks decided to substantially increase the in the relevant European countries or in Europe more generally were amount and duration of liquidity provided to banks and, in some cases, to deteriorate or if further disruptions were to impair the capacity of implemented “non-conventional” measures to inject substantial liquidity the European or global markets to recover from the recent worldwide into the fi nancial system, including direct market purchases of treasury financial crisis, then the impact on the Bank could be significantly bonds, corporate commercial paper and mortgage-backed securities. adverse. Some of these measures remain in place and interest rates remain at historically low levels. These central banks may decide, acting alone or The recent fi nancial crisis has resulted, and is likely to continue to result, in coordination, to modify their monetary policies (and, in particular, raise in more restrictive regulation of the fi nancial services industry, which interest rates) and tighten their policies regarding access to liquidity, could have a material adverse effect on the Bank’s business, fi nancial which could substantially and abruptly decrease the fl ow of liquidity in condition and results of operations. the fi nancial system. Given that the recovery remains relatively fragile, Legislators, governments, regulators, advisory groups, trade and such changes could have an adverse effect on operating conditions for professional associations and various committees at the national, fi nancial institutions and, hence, on the Bank’s fi nancial condition and European and international level have adopted or proposed an array of results of operations.
2010 Registration document and fi nancial report - BNP PARIBAS 135 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
A substantial increase in new provisions or a shortfall in the level of The Bank may generate lower revenues from brokerage and other previously recorded provisions could adversely affect the Bank’s results commission and fee-based businesses during market downturns. of operations and fi nancial condition. During the market downturn in 2009 the Bank experienced a decline in In connection with its lending activities, the Bank regularly establishes the volume of transactions that it executed for its clients and, therefore, provisions for loan losses, which are recorded in its profi t and loss account a decline in its revenues from this activity. There can be no assurance under “cost of risk”. The Bank’s overall level of provisions is based on its that it will not experience a similar trend in future market downturns, assessment of prior loss experience, the volume and type of lending being which may occur periodically and unexpectedly. In addition, because the conducted, industry standards, past due loans, economic conditions and fees that the Bank charges for managing its clients’ portfolios are in many other factors related to the recoverability of various loans. Although the cases based on the value or performance of those portfolios, a market Bank uses its best efforts to establish an appropriate level of provisions, downturn that reduces the value of its clients’ portfolios or increases the its lending businesses may have to increase their provisions for loan amount of withdrawals would reduce the revenues the Bank receives from losses substantially in the future as a result of deteriorating economic its asset management, equity derivatives and private banking businesses. conditions or other causes. Any signifi cant increase in provisions for loan Independently of market changes, below-market performance by the losses or a signifi cant change in the Bank’s estimate of the risk of loss Bank’s mutual funds may result in increased withdrawals and reduced inherent in its portfolio of non-impaired loans, as well as the occurrence infl ows, which would reduce the revenues the Bank receives from its of loan losses in excess of the related provisions, could have a material asset management business. adverse effect on the Bank’s results of operations and fi nancial condition. Protracted market declines can reduce liquidity in the markets, making The Bank may incur signifi cant losses on its trading and investment it harder to sell assets and possibly leading to material losses. activities due to market fl uctuations and volatility. In some of the Bank’s businesses, protracted market movements, The Bank maintains trading and investment positions in the debt, particularly asset price declines, can reduce the level of activity in the 4 currency, commodity and equity markets, and in unlisted securities, market or reduce market liquidity. These developments can lead to real estate and other asset classes. These positions could be adversely material losses if the Bank cannot close out deteriorating positions in affected by volatility in fi nancial and other markets, i.e., the degree to a timely way. This is particularly true for assets that are intrinsically which prices fl uctuate over a particular period in a particular market, illiquid. Assets that are not traded on stock exchanges or other public regardless of market levels. The capital and credit markets experienced trading markets, such as derivatives contracts between banks, may unprecedented volatility and disruption for an extended period from mid have values that the Bank calculates using models rather than publicly- 2007 and particularly in the months following the bankruptcy fi ling of quoted prices. Monitoring the deterioration of prices of assets like these Lehman Brothers in mid September 2008; as a result, the Bank incurred is diffi cult and could lead to losses that the Bank did not anticipate. signifi cant losses on its capital market and investment activities in the fourth quarter of 2008. There can be no assurance that the extreme Signifi cant interest rate changes could adversely affect the Bank’s volatility and market disruptions experienced during the height of the revenues or profi tability. recent fi nancial crisis will not return in the future and that the Bank The amount of net interest income earned by the Bank during any given will not incur substantial losses on its capital market activities as a period signifi cantly affects its overall revenues and profi tability for that result. Moreover, volatility trends that prove substantially different from period. Interest rates are affected by many factors beyond the Bank’s the Bank’s expectations may lead to losses relating to a broad range of control. Changes in market interest rates could affect the interest rates other products that the Bank uses, including swaps, forward and future charged on interest-earning assets differently than the interest rates contracts, options and structured products. paid on interest-bearing liabilities. Any adverse change in the yield curve To the extent that the Bank owns assets, or has net long positions, in any could cause a decline in the Bank’s net interest income from its lending of those markets, a market downturn could result in losses from a decline activities. In addition, maturity mismatches and increases in the interest in the value of its positions. Conversely, to the extent that the Bank has rates relating to the Bank’s short-term fi nancing may adversely affect sold assets that it does not own, or has net short positions in any of those the Bank’s profi tability. markets, a market upturn could expose it to potentially unlimited losses The soundness and conduct of other fi nancial institutions and market as it attempts to cover its net short positions by acquiring assets in a participants could adversely affect the Bank. rising market. The Bank may from time to time have a trading strategy The Bank’s ability to engage in funding, investment and derivative of holding a long position in one asset and a short position in another, transactions could be adversely affected by the soundness of other from which it expects to earn revenues based on changes in the relative fi nancial institutions or market participants. Financial services institutions value of the two assets. If, however, the relative value of the two assets are interrelated as a result of trading, clearing, counterparty, funding or changes in a direction or manner that the Bank did not anticipate or other relationships. As a result, defaults, or even rumours or questions against which it is not hedged, the Bank might realize a loss on those about, one or more fi nancial services institutions, or the nancialfi services paired positions. Such losses, if signifi cant, could adversely affect the industry generally, have led to market-wide liquidity problems and Bank’s results of operations and fi nancial condition. could lead to further losses or defaults. The Bank has exposure to many
136 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
counterparties in the fi nancial industry, directly and indirectly, including Unforeseen external events can interrupt the Bank’s operations and brokers and dealers, commercial banks, investment banks, mutual and cause substantial losses and additional costs. hedge funds, and other institutional clients with which it regularly Unforeseen events such as severe natural disasters, terrorist attacks or executes transactions. Many of these transactions expose the Bank to other states of emergency could lead to an abrupt interruption of the credit risk in the event of default of a group of the Bank’s counterparties Bank’s operations and, to the extent not covered by insurance, could cause or clients. In addition, the Bank’s credit risk may be exacerbated when substantial losses. Such losses can relate to property, fi nancial assets, the collateral held by it cannot be realized upon or is liquidated at prices trading positions and key employees. Such unforeseen events could also not suffi cient to recover the full amount of the loan or derivative exposure lead to additional costs (such as relocation of employees affected) and due to the Bank. increase the Bank’s costs (particularly insurance premiums). In addition, misconduct by fi nancial market participants can have a The Bank is subject to extensive and evolving regulatory regimes in the material adverse effect on fi nancial institutions due to the interrelated countries and regions in which it operates. nature of the fi nancial markets. A recent example is the fraud perpetrated by Bernard Madoff, as a result of which numerous fi nancial institutions The Bank is exposed to regulatory compliance risk, such as the inability globally, including the Bank, have announced losses or exposure to to comply fully with the laws, regulations, codes of conduct, professional losses in substantial amounts. Potentially signifi cant additional potential norms or recommendations applicable to the fi nancial services industry. exposure is also possible in the form of litigation, claims in the context Besides damage to the Bank’s reputation, non-compliance could lead to of the bankruptcy proceedings of Bernard Madoff Investment Services fi nes, public reprimand, enforced suspension of operations or, in extreme (BMIS), and other potential claims relating to counterparty or client cases, withdrawal of operating licenses. This risk is exacerbated by investments made, directly or indirectly, in BMIS or other entities continuously increasing regulatory oversight. This is the case in particular controlled by Bernard Madoff, or to the receipt of investment proceeds with respect to money laundering, the fi nancing of terrorist activities or from BMIS. transactions with countries that are subject to economic sanctions. For example, U.S. laws require compliance with the rules administered by 4 There can be no assurance that any losses resulting from the risks the Offi ce of Foreign Assets Control relating to certain foreign countries, summarized above will not materially and adversely affect the Bank’s nationals or others that are subject to economic sanctions. results of operations. In addition to the measures described above, which were taken or The Bank’s competitive position could be harmed if its reputation is proposed specifi cally in response to the fi nancial crisis, the Bank is damaged. exposed to the risk of legislative or regulatory changes in all of the Considering the highly competitive environment in the fi nancial services countries in which it operates, including, but not limited to, the following: industry, a reputation for fi nancial strength and integrity is critical to the ■ monetary, interest rate and other policies of central banks and Bank’s ability to attract and retain customers. The Bank’s reputation could regulatory authorities; be harmed if it fails to adequately promote and market its products and ■ services. The Bank’s reputation could also be damaged if, as it increases general changes in government or regulatory policy that may its client base and the scale of its businesses, the Bank’s comprehensive signifi cantly infl uence investors’ decisions, particularly in the markets procedures and controls dealing with confl icts of interest fail, or appear to in which the Group operates; fail, to address confl icts of interest properly. At the same time, the Bank’s ■ general changes in regulatory requirements applicable to the fi nancial reputation could be damaged by employee misconduct, misconduct industry, such as rules relating to applicable capital adequacy and by market participants to which the Bank is exposed, a decline in, a liquidity frameworks; restatement of, or corrections to its fi nancial results, as well as any ■ changes in tax legislation or the application thereof; adverse legal or regulatory action. The loss of business that could result ■ changes in the competitive environment and prices; from damage to the Bank’s reputation could have an adverse effect on ■ its results of operations and fi nancial position. changes in accounting norms; ■ changes in fi nancial reporting requirements; and An interruption in or a breach of the Bank’s information systems may result in lost business and other losses. ■ expropriation, nationalization, confi scation of assets and changes in legislation relating to foreign ownership. As with most other banks, BNP Paribas relies heavily on communications and information systems to conduct its business. Any failure or These changes, the scope and implications of which are highly interruption or breach in security of these systems could result in failures unpredictable, could substantially affect the Bank, and have an adverse or interruptions in the Bank’s customer relationship management, general effect on its business, fi nancial condition and results of operations. ledger, deposit, servicing and/or loan organization systems. The Bank cannot provide assurances that such failures or interruptions will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failures or interruptions could have an adverse effect on the Bank’s fi nancial condition and results of operations.
2010 Registration document and fi nancial report - BNP PARIBAS 137 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Notwithstanding the Bank’s risk management policies, procedures and The Bank’s external growth policy carries certain risks, particularly with methods, it could still be exposed to unidentifi ed or unanticipated risks, respect to the integration of acquired entities, and the Bank may be which could lead to material losses. unable to realize the benefi ts expected from its acquisitions. The Bank has devoted significant resources to developing its risk Growth through acquisitions is a component of the Bank’s strategy. This management policies, procedures and assessment methods and strategy exposes the Bank to a number of risks. intends to continue to do so in the future. Nonetheless, the Bank’s risk Integrating acquired businesses is a long and complex process. Successful management techniques and strategies may not be fully effective in integration and the realization of synergies require, among other mitigating its risk exposure in all economic market environments or things, proper coordination of business development and marketing against all types of risk, particularly risks that the Bank may have failed efforts, retention of key members of management, policies for effective to identify or anticipate. The Bank’s ability to assess the creditworthiness recruitment and training as well as the ability to adapt information and of its customers or to estimate the values of its assets may be impaired if, computer systems. Any diffi culties encountered in combining operations as a result of market turmoil such as that experienced during the recent could result in higher integration costs and lower savings or revenues fi nancial crisis, the models and approaches it uses become less predictive than expected. There will accordingly be uncertainty as to the extent of future behaviours, valuations, assumptions or estimates. Some of the to which anticipated synergies will be achieved and the timing of their Bank’s qualitative tools and metrics for managing risk are based on its realization. Moreover, the integration of the Bank’s existing operations use of observed historical market behaviour. The Bank applies statistical with those of the acquired operations could interfere with the respective and other tools to these observations to arrive at quantifi cations of its risk businesses and divert management’s attention from other aspects of the exposures. The process the Bank uses to estimate losses inherent in its Bank’s business, which could have a negative impact on the business credit exposure or estimate the value of certain assets requires diffi cult, and results of the Bank. In some cases, moreover, disputes relating to subjective, and complex judgments, including forecasts of economic acquisitions may have an adverse impact on the integration process or conditions and how these economic predictions might impair the ability have other adverse consequences, including fi nancial ones. 4 of its borrowers to repay their loans or impact the value of assets, which may, during periods of market disruption, be incapable of accurate Although the Bank undertakes an in-depth analysis of the companies it estimation and, in turn, impact the reliability of the process. These tools plans to acquire, such analyses often cannot be complete or exhaustive. and metrics may fail to predict future risk exposures, e.g., if the Bank As a result, the Bank may increase its exposure to doubtful or troubled does not anticipate or correctly evaluate certain factors in its statistical assets and incur greater risks as a result of its acquisitions, particularly models, or upon the occurrence of an event deemed extremely unlikely in cases in which it was unable to conduct comprehensive due diligence by the tools and metrics. This would limit the Bank’s ability to manage its prior to the acquisition. risks. The Bank’s losses could therefore be signifi cantly greater than the Intense competition, especially in France where it has the largest historical measures indicate. In addition, the Bank’s quantifi ed modelling single concentration of its businesses, could adversely affect the Bank’s does not take all risks into account. Its more qualitative approach to revenues and profi tability. managing certain risks could prove insuffi cient, exposing it to material Competition is intense in all of the Bank’s primary business areas in unanticipated losses. France and the other countries in which it conducts a substantial portion The Bank’s hedging strategies may not prevent losses. of its business, including other European countries and the United States. If any of the variety of instruments and strategies that the Bank uses Competition in the Bank’s industry could intensify as a result of the to hedge its exposure to various types of risk in its businesses is not ongoing consolidation of fi nancial services that accelerated during the effective, the Bank may incur losses. Many of its strategies are based recent fi nancial crisis. If the Bank is unable to respond to the competitive on historical trading patterns and correlations. For example, if the Bank environment in France or in its other major markets by offering attractive holds a long position in an asset, it may hedge that position by taking a and profi table product and service solutions, it may lose market share short position in another asset where the short position has historically in key areas of its business or incur losses on some or all of its activities. moved in a direction that would offset a change in the value of the long In addition, downturns in the economies of its principal markets could position. However, the hedge may only be partial, or the strategies used add to the competitive pressure, through, for example, increased price may not protect against all future risks or may not be fully effective pressure and lower business volumes for the Bank and its competitors. in mitigating the Bank’s risk exposure in all market environments or In addition, new lower-cost competitors may enter the market, which against all types of risk in the future. Unexpected market developments may not be subject to the same capital or regulatory requirements or may also reduce the effectiveness of the Bank’s hedging strategies. In may have other inherent regulatory advantages and, therefore, may be addition, the manner in which gains and losses resulting from certain able to offer their products and services on more favourable terms. It ineffective hedges are recorded may result in additional volatility in the is also possible that the increased presence in the global marketplace Bank’s reported earnings. of nationalized fi nancial institutions, or fi nancial institutions benefi ting from State guarantees or other similar advantages, following the recent fi nancial crisis could lead to distortions in competition in a manner adverse to private-sector institutions such as the Bank.
138 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
4.c RISK MANAGEMENT AND CAPITAL Regulatory capital ADEQUACY Breakdown of regulatory capital The BNP Paribas Group is required to comply with the French regulation Regulatory capital is determined in accordance with Comité de la that transpose European Union capital adequacy directives (Directive Réglementation Bancaire et Financière (CRBF) regulation 90-02 dated on the Capital Adequacy of Investment Firms and Credit Institutions and 23 February 1990. It comprises three components – Tier 1 capital, Tier Financial Conglomerates Directive) into French law. 2 capital and Tier 3 capital – determined as follows: In the various countries in which the Group operates, BNP Paribas also ■ core capital (Tier 1) corresponds to consolidated equity (excluding complies with specifi c regulatory ratios in line with procedures controlled unrealised or deferred gains and losses), adjusted for certain items by the relevant supervisory authorities. These ratios mainly address the known as “prudential fi lters”. The main adjustments consist of (i) issues of capital adequacy, risk concentration, liquidity and asset/liability deducting the planned dividend for the year, as well as goodwill and mismatches. other intangibles, (ii) excluding consolidated subsidiaries that are not Since 1 January 2008, the capital adequacy ratio has been calculated subject to banking regulations – mainly insurance companies – and (iii) in accordance with the Decree issued by the Ministry of the Economy, applying limits to the eligibility of certain securities, such as undated Finance and Industry on 20 February 2007 introducing the Basel II capital super subordinated notes; adequacy ratio, i.e. regulatory capital expressed as a percentage of the ■ supplementary capital (Tier 2) comprises some subordinated debt sum of: and any positive credit and counterparty risk valuation differences ■ risk-weighted assets calculated using the standardised approach or between provisions for incurred losses taken under the book method the internal ratings based approach depending on the entity or Group and expected losses on credit exposure measured using the internal business concerned; ratings based approach; ■ the regulatory capital requirement for market and operational risks, ■ a discount is applied to subordinated debt with a maturity of less than 4 multiplied by 12.5. The capital requirement for operational risk fi ve years, and dated subordinated debt included in Tier 2 capital is is measured using the basic indicator, standardised or advanced capped at the equivalent of 50% of Tier 1 capital. Total Tier 2 capital measurement approach, depending on the Group entity concerned. is capped at the equivalent of 100% of Tier 1 capital; ■ Tier 3 capital comprises subordinated debt with shorter maturities and can only be used to cover a certain proportion of market risks; ■ the following items are deducted for the purpose of calculating regulatory capital, half from Tier 1 capital and half from Tier 2 capital: (i) the carrying amount of investments in credit institutions and fi nance companies accounted for by the equity method; (ii) the regulatory capital of credit institutions and fi nance companies more than 10% owned by the Group; (iii) the portion of expected losses on credit exposure measured using the internal ratings based approach which is not covered by provisions and other value adjustments.
2010 Registration document and fi nancial report - BNP PARIBAS 139 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
➤ TABLE 1: AMOUNT OF REGULATORY CAPITAL
In millions of euros 31 December 2010 31 December 2009 Consolidated equity before appropriation of income 85,629 80,344 Regulatory deductions and other items (17,093) (17,434) Intangible assets deductions (13,837) (13,316) of which goodwills (11,735) (11,410) Subordinated debt (notes 5.a and 5.h) 3,187 3,005 Other regulatory items (6,443) (7,123) of which dividend payment (1) (2,511) (1,772) of which deductions of 50% for uneligible items (1,303) (1,146) TIER 1 CAPITAL 68,536 62,910 Total Tier 2 capital 20,109 25,298 of which positive difference between provisions and expected losses over 1 year 482 1,314 Regulatory deductions for remaining uneligible items (1,303) (1,146) Allocated Tier 3 capital 982 1,352 4 REGULATORY CAPITAL 88,324 88,414 (1) Dividend to be recommended at the Annual General Meeting of shareholders.
Capital ratio The Group maintains a balance sheet structure that allows it to fi nance business growth on the best possible terms while preserving its very high Under the European Union regulation transposed into French law by quality credit rating. In line with the commitment to offering shareholders regulation 91-05, the Group’s capital adequacy ratio must be at least 8% an optimum return on their investment, the Group places considerable at all times, including a Tier One ratio of at least 4%. Under United States emphasis on effi ciently investing equity capital and attentively managing capital adequacy regulations, BNP Paribas is qualifi ed as a Financial the balance between fi nancial strength and shareholder return. In 2009 Holding Company and as such is required to have a capital adequacy and 2010, the BNP Paribas Group’s capital adequacy ratios complied with ratio of at least 10%, including a Tier One ratio of at least 6%. regulatory requirements and its own targets. Ratios are monitored and managed centrally, on a consolidated basis, at Regulatory capital levels are managed using information produced during Group level. Where a French or international entity is required to comply the budget process and quarterly estimates, including forecast growth in with banking regulations at its own level, its ratios are also monitored earnings and risk-weighted assets, planned acquisitions, planned issues and managed directly by the entity. of hybrid capital instruments and exchange rate assumptions. Changes Capital management and planning in ratios are reviewed quarterly by the Group’s Executive Management and whenever an event occurs or a decision is made that will materially Capital adequacy ratios are managed prospectively on a prudent basis affect consolidated ratios. that takes into account the Group’s profi tability and growth targets.
140 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
4.d CREDIT AND COUNTERPARTY RISK risk exposure does not include collateral and other security taken by the Group in its lending business or purchases of credit protection. It is based The following table shows all of BNP Paribas Group’s fi nancial assets, on the carrying value of fi nancial assets recognised on the balance sheet. including fi xed-income securities, which are exposed to credit risk. Credit
➤ TABLE 2: EXPOSURE TO CREDIT RISK BY BASEL ASSET CLASS
31 December 2010 31 December 2009 Standardised Average Standardised Average In millions of euros IRBA Approach Total exposure IRBA Approach Total exposure (3) Central governments and central banks 174,362 19,618 193,980 203,515 181,691 31,359 213,050 156,019 Corporates 446,141 154,683 600,824 584,582 419,000 149,341 568,341 507,994 Institutions (1) 100,104 27,217 127,321 132,842 109,701 28,661 138,362 134,093 Retail 198,304 176,009 374,313 363,328 184,382 167,960 352,342 308,891 Securitisation positions 53,332 3,784 57,116 57,498 52,621 5,260 57,881 44,396 Other non credit- obligation assets (2) 89,455 89,455 84,805 261 79,894 80,155 78,461 TOTAL EXPOSURE 972,243 470,766 1,443,009 1,426,570 947,656 462,475 1,410,131 1,229,854 (1) The Basel II Institutions asset class comprises credit institutions and investment fi rms, including those recognised in other countries. It also includes 4 some exposures to regional and local authorities, public sector agencies and multilateral development banks that are not treated as central government authorities. (2) Other non credit-obligation assets include tangible assets and accrued income and other assets. (3) For the record, BNP Paribas Fortis and BGL BNP Paribas have been consolidated only since 30 June 2009.
The table above shows the entire prudential scope based on the asset equipment, and investment property (EUR 29 billion), accrued income and classes defi ned in Article 40–1 of the Decree of 20 February 2007 on other assets (EUR 83 billion), and fi nancing and guarantee commitments capital requirements for credit institutions and investment fi rms. given (EUR 418 billion). Exposure to repo transactions, which is included in the counterparty risk exposures below (EUR -24 billion) and exposure The credit risk exposure shown in the table above at 31 December 2010 not included in the prudential covered scope (EUR -101 billion) have represents the gross amount before impairment of deposit accounts with been deducted from these amounts. central banks and post offi ce banks (EUR 34 billion), loans granted to customers (EUR 711 billion), and credit institutions (EUR 64 billion), loans The table below shows exposure to counterparty risk (measured as and fi xed-income securities classifi ed as “available-for-sale financial exposure at the time of default) by Basel asset class on derivatives assets”, “held-to-maturity fi nancial assets” or designated as at fair value contracts and securities lending/borrowing transactions, after the impact through profi t or loss (EUR 227 billion), remeasurement adjustment on of any netting agreements. interest-rate risk hedged portfolios (EUR 2 billion), property, plant and
2010 Registration document and fi nancial report - BNP PARIBAS 141 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
➤ TABLE 3: EXPOSURE AT DEFAULT TO COUNTERPARTY RISK BY BASEL ASSET CLASS OF DERIVATIVES AND SECURITIES LENDING/BORROWING INSTRUMENTS
31 December 2010 31 December 2009 Standardised Average Standardised Average In millions of euros IRBA Approach Total exposure IRBA Approach Total exposure (2) Central governments and central banks 8,997 6 9,003 8,293 7,582 1 7,583 9,469 Corporates 42,212 2,555 44,767 47,525 46,414 3,869 50,283 53,907 Institutions (1) 37,635 898 38,533 40,307 41,042 1,039 42,081 40,035 Retail - 12 12 13 - 14 14 7 TOTAL EXPOSURE 88,844 3,471 92,315 96,138 95,038 4,923 99,961 103,418 (1) The Basel II Institutions asset class comprises credit institutions and investment fi rms, including those recognised in other countries. It also includes some exposures to regional and local authorities, public sector agencies and multilateral development banks that are not treated as central government authorities. (2) For the record, BNP Paribas Fortis and BGL BNP Paribas have been consolidated only since 30 June 2009.
4 Credit risk knowledge of all the structural aspects of the borrower’s operations and that adequate monitoring will be possible. Management of credit risk - lending activities The Group Credit Committee, chaired by one of the Chief Operating General credit policy and control and provisioning procedures Offi cers or the Head of GRM, has ultimate decision-making authority for The Bank’s lending activities are governed by the Global Credit Policy all credit and counterparty risks. approved by the Risk Committee, chaired by the Chief Executive Monitoring procedures Offi cer. The purpose of the committee is to determine the Group’s risk A comprehensive risk monitoring and reporting system applies to all management strategy. The policy is underpinned by core principles Group entities. The system is organised around Credit Risk Control units related to compliance with the Group’s ethical standards, clear defi nition which are responsible for ensuring that lending commitments comply of responsibilities, the existence and implementation of procedures and with the loan approval decision, that credit risk reporting data are reliable thorough analysis of risks. It is rolled down in the form of specifi c policies and that risks accepted by the Bank are effectively monitored. Daily tailored to each type of business or counterparty. exception reports are produced and various forecasting tools are used to Decision-making procedures provide early warnings of potential escalations of credit risks. Monitoring A system of discretionary lending limits has been established, under is carried out at different levels, generally refl ecting the organisation which all lending decisions must be approved by a formally designated of discretionary lending limits. Depending on the level, the monitoring member of GRM. Approvals are systematically evidenced in writing, teams report to GRM or to the Group Debtor Committee. This committee either by means of a signed approval form or in the minutes of formal meets at monthly intervals to examine all loans in excess of a given meetings of a Credit Committee. Discretionary lending limits correspond threshold, for which it decides on the amount of impairment losses to be to aggregate commitments by business group and vary according to recognised or reversed, based on a recommendation from the business internal credit ratings and the specifi c nature of the business concerned. lines, with GRM’s approval. In addition, a quarterly committee reviews Certain types of lending commitments, such as loans to banks, sovereign sensitive or non-performing loans. loans and loans to customers operating in certain industries are subject to Impairment procedures specifi c authorisation procedures and require the sign-off of an industry GRM reviews all corporate, bank and sovereign loans in default at expert or designated specialist. In retail banking, simplifi ed procedures monthly intervals to determine the amount of any impairment loss to are applied, based on statistical decision-making aids. be recognised, either by reducing the carrying amount or by recording Loan applications must comply with the Bank’s Global Credit Policy a provision for impairment, depending on the applicable accounting and with any specific policies, and must in all cases comply with standards. The amount of the impairment loss is based on the present the applicable laws and regulations. In particular, before making any value of probable net recoveries, including from the possible realisation commitments BNP Paribas carries out an in-depth review of any known of collateral. development plans of the borrower, and ensures that it has thorough
142 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
In addition, a collective impairment is established for each core business Where external ratings exist, they are taken into account by credit risk on a statistical basis. A committee comprising the Core Business Director, analysts, relying on an indicative mapping of the internal rating scale the Group Chief Financial Offi cer or his representative and the Head against the external ratings based on the one-year default probability for of GRM meets quarterly to determine the amount of the impairment. each rating. The Bank’s internal rating for an exposure is not necessarily This is based on simulations of losses to maturity on portfolios of loans the same as the external rating, and there is no strict correspondence whose credit quality is considered as impaired, but where the customers between an external “investment grade” rating (1) and an internal rating in question have not been identifi ed as in default (i.e. loans not covered equal to or higher than 5. Counterparties with a BBB- external rating by specifi c impairment). The simulations carried out by GRM use the may be rated 6 internally, even though an external BBB- theoretically parameters of the internal rating system described below. equates to an internal 5. Annual benchmarking studies are carried out to compare internal and external ratings. Internal rating system Various quantitative and other methods are used to check rating The BNP Paribas Group uses an advanced internal ratings-based approach consistency and the rating system’s robustness. Loans to private (IRBA) to credit risk for the retail, sovereign, institutions, corporate and customers and very small businesses are rated using statistical analyses equity asset classes to calculate the regulatory capital requirements of groups of risks with the same characteristics. GRM has overall for Corporate and Investment Banking, French Retail Banking, part of responsibility for the quality of the entire system. This responsibility is Personal Finance, BNP Paribas Fortis and BNP Paribas Securities Services fulfi lled by either defi ning the system directly, validating it or verifying (BP2S). For other businesses, the Basel II standardised approach is used to its performance. calculate regulatory capital based on external ratings. Each counterparty is rated internally by the Group using the same methods, regardless of Loss Given Default is determined either using statistical models for books the approach used to calculate regulatory capital requirements. with the highest degree of granularity or using expert judgment based on comparative values, in line with a process similar to the one used to The Bank has a comprehensive internal rating system compliant determine the counterparty rating for corporate books. (2) Basel II defi nes with regulatory requirements regarding capital adequacy. A periodic loss given default as the loss that the Bank would suffer in the event of 4 assessment and control process has been deployed within the Bank to the counterparty’s default in times of economic crisis. ensure that the system is appropriate and correctly implemented. The system was formally validated by the French banking supervisor (Autorité For each transaction, it is measured using the recovery rate for a senior de Contrôle Prudentiel) in December 2007. BNP Paribas’ rating system unsecured exposure to the counterparty concerned, adjusted for any was rolled out at BNP Paribas Fortis in May 2010. effects related to the transaction structure (e.g. subordination) and for the effects of any risk mitigation techniques (collateral and other security). For corporate loans, the system is based on three parameters: the Amounts recoverable against collateral and other security are estimated counterparty’s probability of default expressed via a rating, Global each year on a conservative basis and discounts are applied for realising Recovery Rate (or Loss Given Default), which depends on the structure of security in a stressed environment. the transaction, and the Credit Conversion Factor (CCF), which estimates the portion of off-balance sheet exposure at risk. Various credit conversion factors have been modelled by the Bank where permitted (i.e. excluding high-risk transactions where the conversion There are twelve counterparty ratings. Ten cover performing clients with factor is 100%), either using historical internal default data or other credit assessments ranging from “excellent” to “very concerning”, and techniques when there is insuffi cient historical data. Conversion factors two relate to clients classifi ed as in default, as per the defi nition by the are used to measure the off-balance sheet exposure at risk in the event banking supervisor. of borrower default. Unlike rating and recovery rate, this parameter is Ratings are determined at least once a year, in connection with the loan assigned automatically depending on the transaction type and is not approval process, drawing on the combined expertise of business line determined by the Credit Committee. staff and GRM credit risk managers, who conduct a second review. High Each of the three credit risk parameters are backtested and benchmarked quality tools have been developed to support the rating process, including annually to check the system’s performance for each of the Bank’s analysis aids and credit scoring systems. The decision to use these tools business segments. Backtesting consists of comparing estimated and and the choice of technique depends on the nature of the risk. actual results for each parameter. Benchmarking consists of comparing the parameters estimated internally with those of external organisations.
(1) Defi ned as an external rating from AAA to BBB-. (2) Within the Group, the Corporate book includes institutions, corporates, specialised fi nancing and sovereign states.
2010 Registration document and fi nancial report - BNP PARIBAS 143 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
For backtesting ratings, the default rate of populations in each rating Prior to its acquisition, the Fortis group had obtained approval from its category, or each group of risks with similar characteristics for retail supervisor, the Commission Bancaire, Financière et des Assurances (CBFA) banking operations, is compared with the actual default rate observed on in Belgium, to use the advanced IRB approach to calculate its capital a year by year basis. An analysis by rating policy, rating, geographical area requirements under Basel II, pillar 1. The ratings policies and systems of and rating method is carried out to identify any areas where the models BNP Paribas Fortis and BGL BNP Paribas are due to converge with those might be underperforming. The stability of the rating and its population of BNP Paribas, leading to a consistent methodology being used across is also verifi ed. The Group has also developed backtesting techniques the entire Group. The review being conducted for this purpose has shown for default probabilities tailored to low default portfolios to assess the compatibility of the concepts developed in each of the two scopes the appropriateness of the system, even where the number of actual and facilitated harmonisation of the ratings of the key counterparties, defaults is very low, such as sovereigns and banks, for example. The but has not been completed yet. A hybrid approach has therefore been impacts of economic cycles are also taken into account. This backtesting used at 31 December 2010, depending on the relevant businesses, based work has proved that the ratings assigned by the Group are consistent on the methods approved by the supervisors in France, Belgium and with “through the cycle” ratings and that, the estimated default rate is Luxembourg. conservative. Portfolio policy For benchmarking work on non retail exposures, internal ratings are In addition to carefully selecting and evaluating individual risks, compared with the external ratings of several agencies based on the BNP Paribas follows a portfolio-based policy, including the management mapping between internal and external rating scales. Some 10% to of portfolio concentration by borrower, industry and country. The results 15% of the Group’s corporate clients have an external rating and the of this policy are regularly reviewed by the various risk units, including benchmarking studies reveal a conservative approach to internal ratings. the Risk Policy Committee and its various bodies, which may modify or Backtesting of global recovery rates is based mainly on analysing fi ne-tune the general priorities as appropriate, based on GRM’s analysis recovery fl ows on exposures in default. When an exposure has been framework and recommendations. As part of this policy, BNP Paribas may 4 written off, each amount recovered is discounted back to the default use credit risk transfer instruments (such as securitisation programmes date and calculated as a percentage of the exposure. When an exposure or credit derivatives) to hedge individual risks, reduce portfolio has not yet been written off, the amount of provisions taken is used concentration or cap potential losses arising from crisis scenarii. as a proxy for future recoveries. The recovery rate determined in this way is then compared with the initially forecasted rate. As with ratings, Scope and nature of risk reporting and measurement systems recovery rates are analysed on an overall basis and by rating policy All the processes and information systems used by the credit risk reporting and geographical area. Variances on an item by item and average basis function were submitted for review to the French banking supervisor are analysed taking into account the bimodal distribution of recovery (Autorité de Contrôle Prudentiel). For BNP Paribas Fortis and BGL rates. The results of these tests show that the Group’s estimates are BNP Paribas, where the convergence work has not yet been completed, relevant in economic downturns and are conservative on an average the processes and information systems used are those approved by the basis. Benchmarking of recovery rates is based on data pooling initiatives banking supervisory authorities of Belgium and Luxembourg. in which the Group takes part. The current credit risk measurement system is based on a two-tier The result of all backtesting and benchmarking work is presented architecture: annually to the Chief Risk Offi cer and to the bodies responsible for ■ a central tier mainly comprising the credit risk exposure consolidation overseeing the rating system and risk practitioners worldwide. These system, central databases and the engine for computing regulatory results and ensuing discussions are used to help set priorities in terms capital, developed in-house; of developing methodology and deploying tools. ■ a local tier comprising credit risk monitoring and reporting systems Internal estimates of risk parameters are used in the Bank’s day-to- owned by GRM. day management in line with Basel II recommendations. Thus apart from calculating capital requirements, they are used for example when Diversification of exposure to credit risk granting new loans or reviewing existing loans to measure profi tability, The Group’s gross exposure to credit risk (prudential scope) stands at determine collective impairment and for internal and external reporting EUR 1,296 billion at 31 December 2010, compared with EUR 1,272 million purposes. at 31 December 2009. This portfolio, which is analysed below in terms of its diversifi cation, comprises all exposures to credit risk shown in table 2, excluding securitisation positions and other non credit-obligation assets (1).
(1) The scope covered includes loans and receivables due from customers, amounts due from credit institutions and central banks, the Group’s credit accounts with other credit institutions and central banks, fi nancing and guarantee commitments given (excluding repos) and fixed-income securities in the banking book.
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No single counterparty gives rise to an excessive concentration of credit In addition, gross commitments to the top 20 counterparties in the risk, due to the size of the business and the high level industrial and corporate asset class accounted for 4% of this asset class total gross geographical diversifi cation of the client base. The breakdown of credit exposure at 31 December 2010, which represents a similar proportion risks by industry and by region is presented in the charts below. to that recorded at 31 December 2009.
Diversification by counterparty Industry diversification Diversifi cation is a key component of the Bank’s policy and is assessed by The breakdown of exposure by business sector is monitored carefully taking account of all exposure to a single business group. BNP achieves and supported by a forward-looking analysis for dynamic management diversifi cation largely through the extent and variety of its business of the Bank’s exposure. This analysis is based on the in-depth knowledge activities and the widespread system of discretionary lending authorities. of independent sector experts who express an opinion on trends in Diversifi cation of the portfolio by counterparty is monitored on a regular the sectors they follow and identify the factors underlying the risks basis, notably under the Group’s individual risk concentration policy. faced by the main companies in the sector. This process is adjusted by The risk concentration ratio also ensures that the aggregate risk on sector according to its weighting in the Group’s exposure, the technical knowledge required to understand the sector, its cyclicality and degree each benefi ciary (1) does not exceed 25% of the Group’s net consolidated of globalisation and the existence of any particular risk issues. shareholders’ equity. BNP Paribas remains well below the concentration limits set out in the European Directive on Large Exposures.
➤ TABLE 4: BREAKDOWN OF CREDIT RISK BY BASEL II ASSET CLASS AND BY CORPORATE INDUSTRY AT 31 DECEMBER 2010 (*)
6% (5%) 1% (0%) Wholesale & trading Healthcare & Pharmaceuticals 4
4% (5%) 2% (2%) B to B services Metal & mining 1% (1%) 1% (1%) Communication services IT & electronics
4% (3%) 4% (3%) Real estate Transportation & logistics
2% (2%) 2% (3%) Equipment excluding IT Electronic Utilities (electricity, gas, water, etc.)
3% (3%) Energy Excluding Electricity 15% (17%) Central governments and central Banks 2% (2%) Retailers
2% (2%) Construction 14% (16%) 1% (1%) Institutions(**) Chemicals excluding Pharmaceuticals
2% (2%) Agriculture, Food, Tobacco
4% (4%) Other 30% (28%) Retail Total exposure: EUR 1,296 billion at 31 December 2010 EUR 1,272 billion at 31 December 2009
Prudential scope: exposures excluding counterparty risk, other non credit obligation assets and securitisation positions. (*) The percentages in brackets reflect the breakdown at 31 December 2009 [**] The Institutions asset class comprises credit institutions and investment firms, including those recognised in other countries. It also includes some exposures to regional and local authorities, public sector agencies and multilateral development banks that are not treated as central government authorities.
(1) Benefi ciaries whose individual risks each exceed 10% of shareholders’ equity, with a disclosure threshold set by the ACP at EUR 300 million in exposure, are considered as Large Exposures.
2010 Registration document and fi nancial report - BNP PARIBAS 145 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Geographic diversification The geographic breakdown below is based on the country where the Country risk is the sum of all exposures to obligors in the country counterparty conducts its principal business activities, without taking into concerned. It is not the same as sovereign risk, which is the sum of all account the location of its head offi ce. Accordingly, a French company’s exposures to the central government and its various offshoots. Country exposure arising from a subsidiary or branch located in the United risk reflects the Bank’s exposure to a given economic and political Kingdom is classifi ed in the United Kingdom. environment, which are taken into consideration when assessing counterparty quality.
➤ TABLE 5: GEOGRAPHIC BREAKDOWN OF CREDIT RISK BY COUNTERPARTY’S COUNTRY OF BUSINESS AT 31 DECEMBER 2010 (*)
5% (4%) Emerging Asia
3% (3%) Australia & Japan
26% (27%) France 4 2% (2%) Latin America
12% (13%) North America
3% (2%) Gulf States & Africa
1% (2%) Mediterranean 2% (1%) 13% (13%) Turkey Belgium & Luxembourg 3% (3%) Central Eastern Europe
8% (7%) Other Western Europe
12% (13%) 3% (3%) Italy Germany
3% (3%) 4% (4%) Netherlands United Kingdom Total exposure: EUR 1,296 billion at 31 December 2010 EUR 1,272 billion at 31 December 2009
Prudential scope: exposure excluding counterparty risk, other non credit obligation assets and securitisation positions (*) The percentages in brackets reflect the breakdown at 31 December 2009.
The geographic breakdown of the portfolio’s exposure has remained The Group, which is naturally present in most economically active areas, balanced and stable. The Group has retained its predominantly strives to avoid excessive concentrations of risk in countries whose European dimension (72% at 31 December 2010 compared with 73% at political and economic infrastructure is acknowledged to be weak. 31 December 2009).
146 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Quality of the portfolio exposed to credit risk ■ for sovereigns, the ratings are proposed by the Economic Research Department and approved at Country Committee meetings which take Advanced Internal Ratings Based Approach (IRBA) place several times a year. The committee comprises members of The internal rating system developed by the Group covers the entire Executive Management, the Risk Management Department and the Bank. The IRBA, validated in December 2007, covers the Corporate and business lines; Investment Banking (CIB) portfolio, the French Retail Banking (FRB) ■ for medium-sized companies, a score is assigned by the business line’s portfolio, as well as BP2S and part of Personal Finance. Convergence credit analysts and GRM has the fi nal say; projects are continuing with a view to harmonise methods, processes and systems, particularly in the scope resulting from the acquisition of ■ for each of these sub-portfolios, the risk parameters are measured BNP Paribas Fortis and BGL BNP Paribas. Common methods have already using a model certifi ed and validated by the GRM teams, based mainly been rolled out for institutions and sovereigns. Proposals for most of on an analysis of the Bank’s historical data. The model is supported the other portfolios will be made to the relevant banking supervisors as far as possible by tools available through a network to ensure during 2011. consistent use. However, expert judgment remains an indispensable factor. Each rating and recovery rate is subject to an opinion which Corporate model may differ from the results of the model, provided it can be justifi ed. The IRBA for the Corporate book (i.e. institutions, corporates, specialised The method of measuring risk parameters is based on a set of common fi nancing and sovereigns) is based on a consistent rating procedure principles, and particularly the “two pairs of eyes” principle which requires in which GRM has the fi nal say regarding the rating assigned to the at least two people, one of whom has no commercial involvement, to give counterparty and the recovery rate assigned to transactions. Credit their opinion on each counterparty rating and each transaction global Conversion Factors (CCF) are assigned according to counterparty and recovery rate (GRR). transaction type. The same defi nition of default is used consistently throughout the Group. The generic process for assigning a rating to each segment of the The chart below shows a breakdown by credit rating of performing loans 4 Corporate book is as follows: and commitments in the Corporate book (asset classes: corporates, ■ for corporates and structured fi nancing, an analysis is carried out by central governments and central banks, institutions) for all the Group’s the unit proposing the rating and a Global Recovery Rate to the Credit business lines, measured using the internal ratings-based approach. Committee, using the rating models and tools developed by GRM. The This exposure represented EUR 707 billion of the gross credit risk at rating and Global Recovery Rate are validated or revised by the GRM 31 December 2010 compared with EUR 696 billion at 31 December 2009. representative during the Credit Committee meeting. The committee decides whether or not to grant or renew a loan and, if applicable, The majority of commitments are towards borrowers rated as good even reviews the counterparty rating at least once a year; excellent quality, refl ecting the heavy weighting of large multinational ■ for banks, the analysis is carried out by analysts in the Risk groups and fi nancial institutions in the Bank’s client base. A signifi cant Management Function. Counterparty ratings and Global Recovery proportion of commitments to non-investment grade borrowers are Rates are determined during review committees by geographical area highly structured or secured by high quality guarantees implying a to ensure comparability between similar banks; high recovery rate in the event of default. They include export fi nancing covered by export credit insurance written by international agencies, project fi nance, structured fi nance and transaction financing.
2010 Registration document and fi nancial report - BNP PARIBAS 147 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
➤ TABLE 6: BREAKDOWN OF IRBA CORPORATE (*) EXPOSURES BY CREDIT RATING
% of exposure Excellent, good and average risks Under credit watch 30
31 December 2010 31 December 2009 25
20
15
10
5
0 Average PD at one year horizon 0.01% 0.06% 0.08% 0.18% 0.36% 1.06% 2.79% 6.24% 10.63% 18.94% 4 at 31/12/10 Rating 1 2 3 4 5 6 7 8 9 10
(*) The Corporate book shown in the chart above includes corporates, central governments and central banks, and institutions.
The breakdown of Corporate exposures in the IRBA scope remained The majority of FRB’s retail borrowers are assigned a behavioural score broadly steady, with the exception of exposures rated 1. These exposures which serves as a basis to determine the probability of default and, for recorded a signifi cant decline during 2010 owing to the high base of each transaction, the global recovery rate (GRR) and exposure at default comparison set in 2009 as a result of the non-conventional policy set (EAD). These parameters are calculated monthly on the basis of the latest by central banks, which prompted the Bank to place its surplus cash available information. They are drilled down into different scores and with them. made available to the commercial function, which has no involvement in determining risk parameters. These methods are used consistently for Retail banking operations all retail banking customers. Retail banking operations are carried out either by the BNP Paribas network of branches in France, Italy, Belgium and Luxembourg or by a For the portion of the Personal Finance book eligible for the IRBA, the number of subsidiaries and notably Personal Finance. risk parameters are determined by the Risk Management Department on a statistical basis according to customer type and relationship history. The Standard Ratings Policy for Retail Operations [SRPRO] provides a framework allowing Group core businesses and risk management Scoring techniques are used to assign retail customers to risk groups departments to assess, prioritise and monitor credit risks consistently. presenting the same default risk characteristics. This also applies to This policy is used for transactions presenting a high degree of granularity, the other credit risk inputs: Exposure at Default (EAD) and Loss Given small unit volumes and a standard risk profi le. Borrowers are assigned Default (LGD). scores in accordance with the policy, which sets out: The chart below shows a breakdown by credit rating of performing loans and commitments in the retail book for all the Group’s business lines, ■ standard internal ratings based principles, underlining the importance of a watertight process and its ability to adapt to changes in the credit measured using the internal ratings based approach. environment; This exposure represented EUR 191 billion of the gross credit risk at ■ principles for defi ning homogeneous pools of credit risk exposures; 31 December 2010 compared with EUR 177 billion at 31 December 2009. ■ principles relative to credit models, particularly the need to develop discriminating and understandable models, and to model or observe risk indicators downstream in order to calibrate exposures. Risk indicators must be quantifi ed based on historical data covering a minimum period of fi ve years, and in-depth, representative sampling. All models must be documented in detail.
148 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
➤ TABLE 7: BREAKDOWN OF IRBA RETAIL EXPOSURES BY CREDIT RATING
% of exposure Excellent, good and average risks Under credit watch 25%
31 December 2010 31 December 2009 20%
15%
10%
5%
0% Average PD at one year horizon 0.03% 0.11% 0.19% 0.41% 0.99% 2.44% 5.53% 11.30% 31.25% at 31/12/10 Rating 2 3 4 5 6 7 8 9 10 4 Compared with at 31 December 2009, the distribution of retail exposures Standardised approach exposure represents 29% of the BNP Paribas by rating is broadly stable. Group’s total gross exposures, compared with 30% at 31 December 2009. The main entities that used the standardised approach at Standardised approach 31 December 2010 are BNL, BancWest, Personal Finance (consumer For exposures in the standardised approach, BNP Paribas uses the fi nance outside western Europe and all mortgage lending), BNP Paribas external ratings assigned by Standard & Poor’s, Moody’s and Fitch Leasing Solutions (BPLS), UkrSibbank, private banking entities, emerging Ratings. These ratings are mapped into equivalent credit quality levels country subsidiaries and Banque de la Poste in Belgium. as required by the Basel II framework in accordance with the instructions The chart below shows a breakdown by credit rating of performing loans issued by the French banking supervisor (Autorité de Contrôle Prudentiel). and commitments in the Corporate book (exposure classes: corporates, When there is no directly applicable external rating, the issuer’s senior central governments and central banks, institutions) for all the Group’s unsecured rating may, if available, be obtained from external databases business lines, measured using the standardised approach. and used for risk-weighting purposes in some cases. This exposure represented EUR 192 billion of the gross credit risk at 31 December 2010 compared with EUR 203 billion at 31 December 2009.
2010 Registration document and fi nancial report - BNP PARIBAS 149 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
➤ TABLE 8: BREAKDOWN OF CORPORATE (*) EXPOSURE BY WEIGHTING IN THE STANDARDISED APPROACH
% of exposure 31 December 2010 31 December 2009 80%
70%
60%
50%
40%
30%
20%
10%
0% 4 [0;10%] ]10;20%] ]20;50%] ]50;100%] > 100%
(*) The Corporate book shown in the chart above includes corporates, central governments and central banks, and institutions
The increase in the proportion of exposure with a weighting of between Loans with past-due instalments, whether 50% and 100% at 31 December 2010 compared with at 31 December 2009 impaired or not, and related collateral or other was chiefl y attributable to stronger currency effects owing notably to security movements in the euro/dollar exchange rate over the period. The following table presents, for the accounting scope, the carrying amounts of fi nancial assets that are past due but not impaired (by age of past due), impaired assets and related collateral or other security. The amounts shown are stated before any provision on a portfolio basis.
150 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
➤ TABLE 9: LOANS WITH PAST-DUE INSTALMENTS, WHETHER IMPAIRED OR NOT, AND RELATED COLLATERAL OR OTHER SECURITY
31 December 2010 Maturities of unimpaired past-due loans Impaired Collateral Collateral Between assets and received in received in 90 days Between More commitments Total respect of respect of Up to 90 and 180 180 days than 1 covered by loans and unimpaired impaired In millions of euros Total days days and 1 year year provisions commitments past-due loans assets Financial assets at fair value through profi t or loss (excl. variable-income securities) 7 7 - - - - 7 - - Available-for-sale fi nancial assets (excl. variable-income securities) 3 3 - - - 348 351 - 3 Loans and receivables due from credit institutions 371 351 3 1 16 491 862 173 278 Loans and receivables due from customers 15,212 14,380 519 84 229 20,746 35,958 8,818 10,042 Past-due assets, net of individual impairment provisions 15,593 14,741 522 85 245 21,585 37,178 8,991 10,323 4 Financing commitments given 802 802 303 Guarantee commitments given 1,153 1,153 441 Off-balance sheet non- performing commitments, net of provisions 1,955 1,955 - 744 TOTAL 15,593 14,741 522 85 245 23,540 39,133 8,991 11,067
31 December 2009 Maturities of unimpaired past-due loans Impaired Collateral Collateral Between assets and received in received in 90 days Between More commitments respect of respect of Up to 90 and 180 180 days than 1 covered by Total loans and unimpaired impaired In millions of euros Total days days and 1 year year provisions commitments past-due loans assets Financial assets at fair value through profi t or loss (excl. variable-income securities)4 4 4 Available-for-sale fi nancial assets (excl. variable-income securities) 18 18 143 161 Loans and receivables due from credit institutions 358 330 5 8 15 973 1,331 52 291 Loans and receivables due from customers 15,122 14,362 573 107 80 18,983 34,105 9,425 10,652 Past-due assets, net of individual impairment provisions 15,502 14,710 578 115 99 20,099 35,601 9,477 10,943 Financing commitments given 1,129 1,129 790 Guarantee commitments given 461 461 85 Off-balance sheet non- performing commitments, net of provisions 1,590 1,590 - 875 TOTAL 15,502 14,710 578 115 99 21,689 37,191 9,477 11,818
The amounts shown for collateral and other security correspond to the lower of the value of the collateral or other security and the value of the secured assets.
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Counterparty risk For counterparty risk exposures in the BNP Paribas Fortis and BGL BNP Paribas books which have not migrated to BNP Paribas systems, BNP Paribas is exposed to counterparty risk on its capital markets the value at risk is not calculated on the basis of an internal model. transactions. This risk is managed through the widespread use of standard close-out netting and collateral agreements and through a Monitoring and control of counterparty risk dynamic hedging policy. Changes in the value of the Bank’s exposure are Every day, potential future exposures calculated by ValRisk are checked taken into account in the measurement of over-the-counter fi nancial against the approved limits per counterparty. ValRisk allows analysts to instruments through a credit adjustment process. simulate new transactions and measure their impact on the counterparty Netting agreements portfolio, making it an essential tool in the risk approval process. Limits are set by the following committees (in increasing order of authority): Netting is a technique used by the Bank to mitigate counterparty risks Regional Credit Committee, Global Credit Committee and General on derivatives transactions. The Bank primarily uses close-out netting, Management Credit Committee, according to their level of delegated which enables it to close out all positions at current market value in the authority. event of default by the counterparty. All amounts due to and from the counterparty are then netted, to arrive at the net amount payable or Credit adjustments to over-the-counter financial receivable. The net amount may be secured by collateral in the form of instruments cash, securities or deposits. The fair values of fi nancial instruments traded over-the-counter by The Bank also uses bilateral payment flow netting to mitigate the Fixed Income and Global Equity & Commodity Derivatives units counterparty risk on foreign currency payments. Bilateral payment fl ow include credit value adjustments. A credit value adjustment (CVA) netting consists of replacing payment streams in a given currency by a is an adjustment to the value of the trading book to take account of cumulative balance due to or from each party, representing a single net counterparty risk. It refl ects the expected fair value loss on the existing 4 sum in each currency to be settled on a given day between the Bank exposure to a counterparty due to the potential positive value of the and the counterparty. contract, the probability of default, migration of credit quality and the estimated global recovery rate. The transactions are executed according to the terms of bilateral or multilateral master agreements that comply with the general provisions Dynamic counterparty risk management of national or international master agreements. The main bilateral The CVA varies according to changes in the existing exposure and in the agreement models used are those of the Fédération Bancaire Française prices quoted for the counterparty’s credit risk, which may be refl ected (FBF), or those of the International Swaps and Derivatives Association in particular in the credit default swap (CDS) spread variations used to (ISDA) for international agreements. calculate the probability of default. Measurement of exposure To reduce the risk resulting from a deterioration in the inherent credit Exposure at Default (EAD) for counterparty risk is measured using an quality of a portfolio of fi nancial instruments, BNP Paribas may use a internal assessment procedure which is subsequently integrated within dynamic hedging strategy based on the purchase of market instruments the credit risk assessment tool. This tool has been used by the Group such as credit derivatives. for the past ten years and is updated on an ongoing basis. It is based on Monte Carlo simulations which allow analysts to identify likely Securitisation movements in exposure amounts. The stochastic processes used are The BNP Paribas Group is involved in securitisation transactions as sensitive to parameters (including volatility and correlation) calibrated originator, sponsor and investor as defi ned by Basel II. on historical market data. Potential future exposures to counterparty risk are captured using ValRisk, an internal model that simulates several The securitisation transactions described below are those defi ned in thousand possible market trend scenarii and revalue transactions carried the CRD (Capital Requirement Directive) and described in Title V of the out with each counterparty at several hundred future points in time (from Decree of 20 February 2007. They are transactions in which the credit 1 day to more than 30 years for very long-term transactions). Changes in risk inherent in a pool of exposures is divided into tranches. The main exposure amounts are calculated up to the maturity of the corresponding features of these securitisation transactions are: transactions. To aggregate transactions on each counterparty, ValRisk ■ there is a signifi cant transfer of risk; takes into account the legal jurisdiction in which each counterparty ■ payments made depend upon the performance of the underlying operates, and any netting or margin call agreements. exposures; Counterparty risk exposures fl uctuate signifi cantly over time due to ■ subordination of the tranches as defi ned by the transaction determines constant changes in the market parameters affecting the value of the the distribution of losses during the risk transfer period. underlying transactions. Accordingly, any assessment of counterparty risk must consider possible future changes in the value of these transactions as well as their present value.
152 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
As required by the CRD, assets securitised as part of proprietary Proprietary securitisation exposures that do not meet the Basel II securitisation transactions that meet Basel II eligibility criteria, eligibility criteria remain in the portfolio to which they were initially particularly in terms of significant risk transfer, are excluded from assigned. The capital requirement is calculated as if they had not been the regulatory capital calculation. Only BNP Paribas’ positions in the securitised and is included in the section on credit risk. securitisation vehicle, and any commitment subsequently granted to the Consequently, the securitisation transactions discussed below only cover securitisation vehicle, are included in the capital requirement calculation those originated by the Group deemed to be effi cient under Basel II, those using the external ratings based approach. arranged by the Group in which it has retained positions, and those originated by other parties in which the Group has invested.
The Group’s activities in each of these roles are described below:
➤ TABLE 10: SECURITISED EXPOSURES AND SECURITISATION POSITIONS (HELD OR ACQUIRED) BY ROLE
In millions of euros 31 December 2010 31 December 2009 Securitised Securitised exposures Securitisation exposures Securitisation originated by positions held or originated by positions held or BNP Paribas role BNP Paribas (1) acquired (EAD) (2) BNP Paribas (1) acquired (EAD) (2) Originator 15,985 4,351 18,219 5,433 Sponsor 217 17,440 548 18,289 Investor 0 30,140 0 28,354 4 TOTAL 16,202 51,931 18,767 52,076 (1) Securitised exposures originated by the Group correspond to the underlying exposures recognised on the Group’s balance sheet which have been securitised. (2) Securitisation positions correspond to tranches retained in securitisation transactions originated or arranged by the Group, tranches acquired by the Group in securitisation transactions arranged by other parties, and facilities granted to securitisation transactions originated by other parties.
Proprietary securitisation Equipment Solutions, EUR 9.4 billion for BNL and EUR 34.5 billion for (originator under Basel II) BNP Paribas Fortis. As part of the day-to-day management of liquidity, the Group’s least liquid Only fi ve of these transactions, representing a total securitised exposure of assets may be swiftly transformed into liquid assets by securitising loans EUR 2.7 billion, have been excluded from Basel II credit risk framework and (mortgages and consumer loans) granted to retail banking customers, integrated in Basel II securitisation framework (signifi cant risk transfer), as well as loans granted to corporate customers. and are included in the table above. Securitisation positions retained Several securitisation transactions were carried out in 2010 by in these transactions amount to EUR 1.2 billion at 31 December 2010 BNP Paribas subsidiaries, Personal Finance in the Netherlands and compared with EUR 0.7 billion at 31 December 2009. BNP Paribas Fortis in Belgium. The total amount securitised was EUR When BNP Paribas acquired the Fortis Group entities, the riskiest portion 9 billion. All these transactions have been retained by the subsidiaries of their structured asset portfolio was sold to a dedicated SPV, Royal Park concerned. Given the weak market appetite for securitisation products Investment. The SPV’s securitised exposures amount to EUR 11.5 billion. since August 2007, the Group’s strategy regarding securitising its retail The Group retains EUR 2.9 billion in securitisation positions in the SPV at loans has been to carry out self-retained transactions that may serve 31 December 2010 compared with EUR 4.1 billion at 31 December 2009, as collateral for refi nancing operations. These transactions are not including EUR 0.2 billion of the equity tranche, EUR 0.5 billion of fi nancing deemed as securitisation for the calculation of Basel II regulatory capital corresponding to a senior tranche and EUR 2.2 billion of financing because they do not give rise to any signifi cant risk transfer. The relevant corresponding to a super senior tranche (compared with EUR 3.4 billion exposures are therefore included in the section on credit risk. at 31 December 2009). 35 transactions, totalling a securitised exposure (Group BNP Paribas’ Lastly, the exposures retained in securitisation transactions originated by share) of EUR 60.9 billion, are outstanding at 31 December 2010. BNP Paribas amounted to EUR 0.2 billion at 31 December 2010, compared These include EUR 16.6 billion for Personal Finance, EUR 0.4 billion for with EUR 0.6 billion at 31 December 2009.
2010 Registration document and fi nancial report - BNP PARIBAS 153 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Securitisation as sponsor on behalf of clients CIB Resource & Portfolio Management (RPM) also managed securitisation CIB Fixed Income carries out securitisation programmes on behalf of programmes as an investor during 2010, notably setting up a mixed its customers. Under these programmes, liquidity facilities and, where investment programme (securitisation exposure and corporate appropriate, guarantees are granted to special purpose entities. Special loan exposure) that was launched in the fourth quarter of 2010. The purpose entities over which the Group does not exercise control are not exposure of the RPM-managed portfolio stood at EUR 389 million at consolidated. 31 December 2010, compared with EUR 79 million at 31 December 2009. During 2010, Investment Solutions did not realise any fresh investment Short-term refinancing in securitisation programmes. Meanwhile, repayments and disposals At 31 December 2010, six non-consolidated multiseller conduits (Eliopée, reduced exposure from EUR 3 billion at 31 December 2009 to EUR 2.1 Thésée, Starbird, J Bird, J Bird 2 and Matchpoint) were managed by the billion at 31 December 2010. Group on behalf of customers. These entities are refi nanced on the local short-term commercial paper market. In a climate of fi nancial crisis and BancWest invests exclusively in securitisation positions in listed securities risk management, CIB Fixed Income has scaled back its international as a core component of its refi nancing and own funds investment policy. securitisation business and the liquidity facilities granted to these six BancWest carried out some substantial disposals during 2010 to capitalise conduits decreased from EUR 11.1 billion at 31 December 2009 to EUR on market conditions that had become favourable again and thus to 9.6 billion at 31 December 2010). reduce positions requiring signifi cant amounts of capital. The riskiest positions were sold. At 31 December 2010, BancWest’s securitisation Medium/long-term refinancing positions amounted to EUR 0.5 billion compared with EUR 1.6 billion at In Europe and Northern America, the BNP Paribas Group’s structuring 31 December 2009. ability remained intact and it was therefore able to continue providing BNP Paribas Fortis’ portfolio of structured loans, which was not assigned to securitisation solutions to its clients, based on products better geared a business line and is housed in “Other activities”, is worth EUR 8.4 billion. to current conditions in terms of risk and liquidity. These products 4 This portfolio carries a guarantee by the Belgian State on the second are sometimes accompanied by specific banking facilities such as level of losses. Beyond a fi rst tranche of fi nal loss, against the notional bridge fi nancing, senior loans and cash facilities. “Technical” liquidity value of EUR 3.5 billion largely provisioned in BNP Paribas Fortis’ opening facilities, designed to cover maturity mismatches are also granted, balance sheet, the Belgian State guarantees on demand a second loss where appropriate, to non consolidated funds, arranged by the Group tranche of up to EUR 1.5 billion. for receiving securitised customer assets. The total of these facilities, including the few residual positions retained, amounted to EUR 1.7 billion In addition, BNP Paribas Fortis’ investments in Dutch RMBS came to at 31 December 2010 compared with EUR 1.3 billion at 31 December 2009. EUR 8.1 billion. BNP Paribas Fortis has also granted liquidity facilities to the Scaldis Securitisation risk management multiseller conduit, totalling EUR 6.1 billion at 31 December 2010 Securitisation transactions arranged by BNP Paribas on behalf of clients compared with EUR 5.8 billion at 31 December 2009. are highly technical and specifi c in nature. They are therefore subject to During 2010, BNP Paribas continued to manage CLO (Collateralized Loan a specifi c risk management system: Obligation) conduits on behalf of clients but did not originate any new ■ independent analysis and monitoring by dedicated teams within the European CLO packages during the year in view of market conditions. Risk Department; Securitisation positions retained amounted to EUR 25 million at 31 December 2010. ■ specifi c processes (with specifi c committees, approval procedures, credit and rating policies) to ensure a consistent, tailored approach. Securitisation as investor Given the crisis in the securitisation market since 2007 and the size of The BNP Paribas Group’s securitisation business as an investor (within the portfolio, especially since the consolidation of BNP Paribas Fortis the meaning of the Basel II rules) is mainly carried out by CIB, Investment securitisation exposures, this system has also been strengthened by: Solutions and BancWest, aside from the portfolio positions inherited from ■ a crisis reporting procedure (at least quarterly through Capital Market Fortis. Risk Committees, Internal Control, Risk and Compliance Committee CIB Fixed Income is responsible for monitoring and managing an ABS (CCIRC) and Corporate Communication via reports recommended by portfolio (Asset Backed Securities), which represented a total of EUR the Financial Stability Forum); 4.4 billion of ABS (1) at 31 December 2010 compared with EUR 4.8 billion ■ creation of a dedicated ABS unit in the Risk Department to coordinate at 31 December 2009. Fixed Income also manages liquidity facilities the independent review and monitoring of ABS related risks; granted by banking syndicates to ABCP (Asset Backed Commercial Paper) ■ conduits managed by a number of major international industrial groups centralisation of ABS valuation issues in a specialised Fixed Income that are BNP Paribas clients representing a total of EUR 0.5 billion at unit on behalf of all businesses; 31 December 2010, unchanged compared with at 31 December 2009. ■ a dedicated Debtors Committee to review trends in ABS related provisions on a quarterly basis. In addition, Fixed Income also houses Negative Basis Trade (NBT) positions representing an exposure at default of EUR 5.5 billion.
(1) Exposure At Default (EAD).
154 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
4.e MARKET RISK Limit setting and tracking Responsibility for setting and tracking limits is delegated to three levels, Market risk related to financial instruments which are, in order, the CMRC, the Head of the Business Line and the Head of Trading. Definitions Limits may be changed either temporarily or permanently, authorised in Market risk, as defi ned in note 4.b, arises mainly from trading activities accordance with the level of delegation and the prevailing procedures. carried out by the Fixed Income and Equity teams with Corporate and Investment Banking and encompasses different risk factors defi ned as GRM’s responsibility in terms of market risk management is to defi ne, follows: measure and analyse sensitivities and risk factors, and to measure and control Value at Risk (VaR), which is the global indicator of potential ■ interest rate risk is the risk that the value of a fi nancial instrument losses. GRM ensures that all business activity complies with the limits will fl uctuate due to changes in market interest rates; approved by the various committees. In this respect, it also approves ■ foreign exchange risk is the risk that the value of an instrument will new activities and major transactions, reviews and approves position fl uctuate due to changes in foreign exchange rates; valuation models and conducts a monthly review of market parameters ■ equity risk arises from changes in the market prices and volatilities of (MAP review) in association with Group Product Control (GPC). equities and changes in the prices of equity indices; GRM reports to Executive Management and business lines Senior ■ commodities risk arises from changes in the market prices and Management on its risk analysis work. volatilities of commodities and changes in the prices of commodities The Group uses an integrated system called Market Risk eXplorer indices; (MRX) to follow the trading positions on a daily basis and manage VaR ■ credit spread risk arises from the change in the credit quality of an calculations. MRX not only tracks VaR, but also detailed positions and issuer and is refl ected in changes in the cost of purchasing protection sensitivities to market parameters based on various simultaneous criteria on that issuer; (currency, product, counterparty, etc.). MRX is also confi gured to include 4 ■ options give rise to an intrinsic volatility and correlation risk, whose trading limits, reserves and stress tests. parameters can be determined from observable prices of options Valuation control processes traded in an active market. Since 2007 the Group has enhanced its portfolio valuation controls Governance by forming a Group Product Control team. This team works under a The market risk management system aims to track and control charter outlining its responsibilities (towards GRM, Group Development market risks whilst ensuring that the control functions remain totally and Finance, the front-offi ce, IT, and Operations) in terms of nancialfi independent from the business lines. instrument valuations, gains or losses on capital market activities, and control processes. The system is structured around several committees: The team’s main areas of involvement are: ■ the Capital Markets Risk Committee (CMRC) is the main committee governing the risks related to capital markets. It is responsible for ■ Transaction accounting; addressing, in a coherent manner, the issues related to market ■ Market Parameter (MAP) Reviews (monthly reviews of book valuations); and counterparty risk. The CMRC sets the aggregate trading limits, ■ Model reviews; and outlines risk approval procedures, and reviews loss statements and ■ hypothetical losses estimated on the basis of stress tests. It meets Reserve calculations. twice a year and is chaired by the Group CEO or by one of the Bank’s The procedures for these controls are discussed below. two COOs; Transaction accounting controls ■ the Product and Financial Control Committee (PFCC) meets quarterly Operations (middle-offi ce) is responsible for controlling the transaction to review valuation issues and take any requisite decisions, such as accounting process, although GRM checks the process for more structured validating master procedures. It is chaired by the Bank’s CFO and other transactions requiring special attention. members include the Chief Risk Offi cer (CRO), head of CIB as well as other representatives of Group Development and Finance and of the Market Parameter (MAP) Review Risk Department; GRM and Group Product Control are jointly responsible for MAP Review. ■ at business unit level, the Valuation Review Committee (VRC) meets This review entails a formal verifi cation of all market parameters and are monthly to examine and approve the results of MAP Reviews and any generally performed monthly; the more liquid parameters are reviewed changes in reserves. The Valuation Review Committee also acts as the daily. Group Product Control is in charge of reviewing plain vanilla market referee in any disagreements between trading and control functions. parameters (most of which can be cross-checked against external data). The committee is chaired by the Senior Trader and other members GRM has authority in all matters related to valuation methods and is include representatives from trading, GRM, Group Product Control, notably in charge of reviewing complex parameters and models and and Group Development and Finance; calculating reserves. The information used for MAP Reviews is obtained ■ created in 2010, the Valuation Methodology Committee (VMC) meets from brokers and suppliers of consensus market prices. quarterly to monitor approvals and review models.
2010 Registration document and fi nancial report - BNP PARIBAS 155 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
The MAP Review methodology is outlined in separate procedures for ■ and determines whether a transaction is observable whenever this each major product line, which also set out the responsibilities of GRM determination cannot be performed by the middle-offi ce’s automated and Group Product Control. All MAP Review conclusions are documented, processes. and the corresponding adjustments are made in the middle-offi ce books. The middle-offi ce calculates the necessary profi t and loss adjustments MAP Review results are presented to business managers during Valuation and ensures that the observability criteria for each transaction have Review Committee meetings. been applied correctly.
Models review Risk reports and information for Executive The front-office quantitative analysts are mainly responsible for Management proposing new methodologies aiming to improve product valuation and The Global Risk Analysis and Reporting team is responsible for generating risk calculation. The Research and IT teams then put them into practice. risk reports. GRM is responsible for controlling and analysing these models. The main The following risk reports are generated on a regular basis: review processes are as follows: ■ weekly “Main Position” reports for each business line (equity ■ model approval, which consists of performing a formal review when derivatives, commodities, credit, and interest rate and currency changes are made to a model’s methodology (“model event”). The derivatives), summarising all positions and highlighting items needing approval process may be swift or it may be comprehensive, in which particular attention; these reports are sent to business line managers; case the results of the review are documented in a Model Approval ■ bimonthly “Over €15m at Risk” reports sent to Executive Management; Report explaining the basis of and conditions for the approval; ■ “CMRC Events Summary” reports used as a basis for discussions during ■ model testing, designed to test a model’s quality and robustness. Other CMRC meetings; models may be used for calibration and comparison. The results of the testing are documented; ■ “Position Highlights” reports focusing on specifi c issues; and 4 ■ ■ product/model mapping, a process that examines whether pricing geographical dashboards such as “UK Risk Dashboard” reports; models are suited to their products and being used properly within ■ the “Global risk dashboard” presented at bimonthly meetings between the system, including checking the necessary confi gurations. CIB and GRM managers to ensure coordinated efforts and make Reserve calculations decisions in light of recent market developments and changes in counterparties’ circumstances. GRM defi nes and calculates “reserves”, which correspond to fair value adjustments and are accounted for as deductions from earnings. Reserves Measurement of market risk can be considered, depending on the case, either as the price for closing Market risk is measured using three types of indicator (sensitivities, VaR a position or as a premium for a risk that cannot be diversifi ed or hedged. and stress tests), which aim to capture all risks. Reserves mainly cover: Analysis of sensitivities to market parameters ■ liquidity risk and bid/offer spreads; Market risk is first analysed by systematically measuring portfolio ■ uncertainty and modelling risk. sensitivity to various market parameters. The information thus obtained The reserve mechanisms are documented in detail and GRM is responsible is used to set tolerance ranges for maturities and option strike prices. The for implementing them. Reserves for uncertainty and modelling risk are results of these sensitivity analyses are compiled at various aggregate compatible with the “prudent valuation” regulatory approach but may position levels and compared with market limits. not be compatible with accounting standards such as penalties for large Measurement of market risk under normal market conditions: positions. In this case, the reserves are not shown in the accounting VaR valuation of the relevant positions and instruments. VaR is calculated using an internal model. It estimates the potential loss The methodology for calculating reserves is regularly reviewed and on a trading portfolio under normal market conditions over one trading improved as part of the MAP and models review processes. day, based on changes in the market over the previous 260 days with a confi dence level of 99%.The model has been approved by the banking Day-one-profit or loss supervisor and takes into account of all usual risk factors (interest rates, Some structured transactions require the use of parameters considered credit spreads, exchange rates, equity prices, commodities prices, and as unobservable, whereas IAS 39 prescribes the deferral of the initial associated volatilities), as well as the correlation between these factors income from these transactions. in order to include the effects of diversifi cation. It also takes into account GRM works with Group Development and Finance, middle-offi ces, and of specifi c credit risk. business lines on the process of identifying and handling these profi t and The algorithms, methodologies and sets of indicators are reviewed and loss items, and notably: improved regularly to take into account of growing market complexity ■ determines whether a parameter is observable; and product sophistication. ■ documents the observability status;
156 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
For the scope comprising the Fortis Group entities acquired by Historical VaR (10 days, 99%) in 2010 BNP Paribas, market risk is also measured using the global VaR indicator. The Values at Risk (VaRs) set out below are calculated from an The methodology has been approved by the Belgian banking supervisor internal model, which uses parameters that comply with the method and is similar to that used by the Group. recommended by the Basel Committee for determining estimated value Measurement of market risk under extreme market conditions at risk (“Supplement to the Capital Accord to Incorporate Market Risks”). They are based on a ten-day time horizon and a 99% confi dence interval. The Group performs stress tests to simulate the impact of extreme market conditions on the value of trading portfolios. These conditions are In 2010, total average VaR for the BNP Paribas scope excluding Fortis is refl ected in the extreme stress scenarii and adjusted to refl ect changes EUR 144 million (with a minimum of EUR 105 million and a maximum of in the economic environment. GRM uses 15 stress test scenarii covering EUR 233 million), after taking into account the EUR -173 million netting all market activities: fi xed-income, forex, equity derivatives, commodities effect between the different types of risks. These amounts break down and treasury. These scenarii are presented to and reviewed by the CMRC as follows: on a monthly basis. GRM may also outline specifi c scenarios to carefully manage some types of risks, most notably the more complex risks requiring a full revaluation rather than an estimate based on sensitivity indicators. The results of these stress tests may be presented to business line managers and stress test limits may be set.
4
2010 Registration document and fi nancial report - BNP PARIBAS 157 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
➤ TABLE 11: VALUE AT RISK (10 DAYS - 99%): BREAKDOWN BY RISK TYPE FOR THE BNP PARIBAS SCOPE EXCLUDING BNP PARIBAS FORTIS
Year to 31 Year to 31 Dec. 2010 Dec. 2009 Type of risk Average Minimum Maximum 31 December 2010 Average 31 December 2009 Interest rate risk 84 54 143 109 132 147 Credit risk 115 80 153 118 141 138 Foreign exchange risk (1) 31 14 60 22 44 35 Equity price risk 74 33 162 53 113 89 Commodity price risk 13 7 22 13 16 18 Netting Effect (173) (83) (307) (174) (258) (235) TOTAL VALUE AT RISK 144 105 233 141 188 192 (1) The VaR for foreign exchange risk is outside the scope of Pillar I of Basel II
In 2010, total average VaR for the BNP Paribas Fortis scope, which was signifi cantly lower than in 2009, was EUR 32 million (with a minimum of EUR 15 million and a maximum of EUR 62 million), after taking into account the EUR 12 million netting effect between different types of risk. 4 The breakdown is as follows: ➤ VALUE AT RISK (10 DAYS - 99%): BREAKDOWN BY RISK TYPE FOR THE BNP PARIBAS FORTIS SCOPE
Year to 31 Year to 31 Dec. 2010 Dec. 2009 Type of risk Average Minimum Maximum 31 December 2010 Average 31 December 2009 Interest rate risk 27 10 44 29 54 17 Credit risk Foreign exchange risk 4 1 11 4 9 6 Equity price risk 11 5 29 7 31 13 Commodity price risk 2 1 6 1 8 3 Netting Effect (12) (2) (28) (3) (23) (15) TOTAL VALUE AT RISK 32 15 62 38 79 24
158 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Risk exposure in 2010
➤ CHANGE IN VaR (1 DAY-99%) IN MILLIONS OF EUROS FOR THE BNP PARIBAS SCOPE EXCLUDING FORTIS
In millions of euros 160
140
120
100
80
60
40
20
0 January February March April May June July August September October November December 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 4
GRM continuously tests the accuracy of its internal model through a A 99% confi dence level means that in theory the Bank should not incur variety of techniques, including a regular comparison over a long-term daily losses in excess of VaR more than two or three days a year. horizon between actual daily losses on capital market transactions and In 2010, daily losses exceeded the VaR on one occasion during the second 1-day VaR. quarter, as the capital markets were affected by growing concerns about the indebtedness of European governments.
➤ CHANGE IN VaR (1 DAY-99%) IN MILLIONS OF EUROS FOR THE BNP PARIBAS FORTIS SCOPE
En millions d’euros In millions of euros 25
20
15
10
5
0 January February March April May June July August September October November December 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010
VaR is stable at around EUR 10 million. The increase in volatility evident from March onwards was offset by the reduction in scope since a number of positions reached maturity. In addition, some portfolios were sold to BNP Paribas.
2010 Registration document and fi nancial report - BNP PARIBAS 159 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Market risk related to banking activities Modelling equity risk The market risk related to banking activities encompasses the risk of loss In the BNP Paribas historical scope, the Group uses an internal model on equity holdings on the one hand, and the interest rate and foreign derived from the one used to calculate daily VaR on the trading exchange risks stemming from banking intermediation activities on the book. However, it differs in terms of horizon and confi dence interval, other hand. Only the equity and foreign exchange risks give rise to a which are applied in accordance with Article 59.1-c ii of the Decree weighted assets calculation under Pillar 1. The interest rate risk falls of 20 February 2007 issued by the Ministry of Economics, Finance and under Pillar 2. Industry. The model estimates the contribution of each equity exposure to the economic loss in the most extreme market conditions for the Bank, Interest rate and foreign exchange risks related to banking intermediation and then determines the level of losses actually incurred by the Bank. activities and investments mainly concern retail banking activities in domestic markets (France, Italy, Belgium and Luxemburg), the specialised Various types of risk factors are used to measure equity risk and financing and savings management subsidiaries, the CIB financing they depend largely on the level of available or useable share price businesses, and investments made by the Group. These risks are managed information: by the ALM-Treasury Department. ■ share price is the risk factor used for listed equities with a suffi ciently At Group level, ALM-Treasury reports directly to one of the Chief Operating long historical track record; Offi cers. Group ALM-Treasury has functional authority over the ALM and ■ for other listed and unlisted equities, each line is assigned an industry Treasury staff of each subsidiary. Strategic decisions are made by the and country-specifi c systemic risk factor, plus an equity-specifi c risk Asset and Liability Committee (ALCO), which oversees ALM-Treasury’s factor; activities. These committees have been set up at Group, division and ■ if the exposure is outside the eurozone, an exchange rate risk factor operating entity level. is also added. Equity risk The model has been validated by the banking supervisor for measuring 4 the capital requirement for equity risk as part of the Basel II approval Scope process. Equity interests held by the Group outside the trading book are securities Pending convergence, the approach used temporarily for the that convey a residual, subordinated claim on the assets or income of the BNP Paribas Fortis and BGL BNP Paribas historical scope is that approved issuer or have a similar economic substance. They include: by the CBFA. ■ listed and unlisted equities and units in investment funds; Accounting principles and valuation methods ■ options embedded in convertible and mandatory convertible bonds; Accounting principles and valuation methods are set out in note 1 – ■ equity options; Summary of signifi cant accounting policies applied by the BNP Paribas ■ super subordinated notes; Group - 1.c.9 Determination of market value. ■ commitments given and hedges related to equity interests; and ■ interests in companies accounted for by the equity method.
160 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
➤ TABLE 12: EXPOSURE (*) TO EQUITY RISK
In millions of euros 31 December 2010 31 December 2009 Internal model method 13,797 12,463 Listed equities 4,529 4,727 Other equity exposures 5,994 5,114 Private equity in diversifi ed portfolios 3,274 2,622 Simple risk weight method 658 1,273 Listed equities 5278 Other equity exposures 82 416 Private equity in diversifi ed portfolios 571 579 Standardised approach 1,427 1,777 TOTAL 15,883 15,513 (*) Fair Value (on and off-balance sheet).
Total gains and losses ■ other positions, including the balance of unmatched positions in the Total gains and losses are set out in note 5.c. – Available-for-sale currencies mentioned above, are subject to a capital requirement fi nancial assets. of 8% of their amount. 4 Foreign exchange risk and hedging of earnings generated in Foreign exchange risk (Pillar 1) foreign currencies Calculation of risk-weighted assets The Group’s exposure to operational foreign exchange risks stems Foreign exchange risk relates to all transactions whether part of the from the net earnings in currencies other than the euro. The Group’s trading book or not. This risk is treated in the same way under both policy is to systematically hedge the variability of its earnings due to Basel I and Basel II. currency movements. Earnings generated locally in a currency other than the operation’s functional currency are hedged locally. Net earnings Except for BNP Paribas Fortis Belgium’s currency exposure, which is generated by foreign subsidiaries and branches and positions relating to calculated using the BNP Paribas Fortis internal model approved by portfolio impairment are managed centrally. the CBFA, exposure to foreign exchange risk is now determined under the standardised approach, using the option provided by the banking Foreign exchange risk and hedging of net investments in supervisor to limit the scope to operational foreign exchange risk. foreign operations Group entities calculate their net position in each currency, including The Group’s currency position on investments in foreign operations arises the euro. The net position is equal to the sum of all asset items less all mainly on branch capital allocations and equity interests denominated liability items plus off-balance sheet items (including the net forward in foreign currencies, fi nanced by purchasing the currency in question. currency position and the net delta-based equivalent of the currency The Group’s policy consists in hedging portfolio exposure to liquid option book), less structural, non-current assets (long-term equity currencies. This policy is implemented by borrowing amounts in the interests, property, plant and equipment, and intangible assets). These same currency as the one of equity investments. Such borrowings are positions are converted into euros at the exchange rate prevailing on documented as hedges of net investments in foreign operations. the reporting date and aggregated to give the Group’s overall net open position in each currency. The net position in a given currency is long Interest rate risk (Pillar 2) when assets exceed liabilities and short when liabilities exceed assets. Interest rate risk management framework Interest rate risk on the For each Group entity, the net currency position is balanced in the commercial transactions of the domestic retail banking (France, Italy, relevant currency (i.e. its reporting currency) such that the sum of long Belgium and Luxemburg) and international retail banking, the specialised positions equals the sum of short positions. fi nancing subsidiaries, and the savings management business lines in the The rules for calculating the capital requirement for foreign exchange Investment Solutions and CIB’s Corporate Banking divisions are managed risk are as follows: centrally by ALM-Treasury through the client intermediation book. Interest rate risk on the Bank’s equity and investments is also managed ■ matched positions in currencies of Member States participating in by ALM-Treasury, in the equity intermediation and investments book. the European Monetary System are subject to a capital requirement of 1.6% of the value of the matched positions; Transactions initiated by each BNP Paribas business line are transferred to ALM-Treasury via internal contracts booked in the management ■ CFA and CFP francs are matched with the euro, and are not subject accounts or via loans and borrowings. ALM-Treasury is responsible for to a capital requirement; managing the interest rate risk inherent in these transactions. ■ positions in closely correlated currencies are subject to a capital requirement of 4% of the matched amount;
2010 Registration document and fi nancial report - BNP PARIBAS 161 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
The main decisions concerning positions arising from banking Risk limits intermediation activities are taken at monthly or quarterly Committee For the customer banking intermediation books, overall interest rate meetings for each business line. These meetings are attended by the risk for Retail Banking entities is subject to a primary limit, based on the management of the business line, ALM-Treasury, Group Development sensitivity of revenues to changes in nominal and real interest rates and and Finance and GRM. in the infl ation rate over at least a three-year timeframe. The limit is Measurement of interest rate risk based on annual revenues, in order to control uncertainty about future fl uctuations in revenues caused by changes in interest rates. This limit is Banking book interest rate gaps are measured, with embedded supplemented beyond the three-year timeframe by an interest rate gap behavioural options translated into delta equivalents. Maturities limit, expressed as a percentage of customer deposits. This percentage of outstanding assets are determined based on the contractual is a declining function of the management period. This limit is used to characteristics of the transactions and historical customer behaviour. For manage long-term interest rate risk. retail banking products, behavioural models are based on historical data and econometric studies. The models deal with early repayments, current The specialised fi nancing subsidiaries are exposed to very low levels of accounts in credit and debit and savings accounts. Theoretical maturities interest rate risk, considering the centralisation of risks at ALM-Treasury of equity capital are determined according to internal assumptions. level. The residual risk is controlled by technical interest rate gap limits that are monitored by the ALM Committee of the relevant business line. In the case of retail banking activities, structural interest rate risk is also measured on a going-concern basis, incorporating dynamic changes in Sensitivity of revenues to general interest-rate risk balance sheet items, through an earnings sensitivity indicator. Due to the The sensitivity of revenues to a change in interest rates is one of the existence of partial or even zero correlations between customer interest key indicators used by the Group in its analysis of overall interest-rate rates and market rates, and the volume sensitivity caused by behavioural risk, both at local and at Group level. The sensitivity of revenues is options, rotation of balance sheet items generates a structural sensitivity calculated across the entire banking book including the customer banking 4 of revenues to interest rate changes. Lastly, for products with underlying intermediation businesses, equity, excluding market activities, and for all behavioural options, a specifi c option risk indicator is analysed in order currencies to which the Group is exposed. It relies on reasonnable activity to fi ne-tune hedging strategies. assumptions at one year horizon. The choice of indicators and risk modelling, as well as the production of The indicator is presented in the table below. Over this one-year horizon, indicators, are controlled by independent Product Control teams and by the banking intermediation book’s exposure to interest-rate risk is limited: dedicated Group Risk Management teams. The results of these controls an increase of 100 basis points in interest rates right across the yield are presented regularly to ad-hoc committees and once a year to the curve would lead to a decrease of less than 0.1% in the Group’s revenues, Board of Directors. all currencies combined. These indicators are systematically presented to the ALM Committees, and serve as the basis for hedging decisions taking into account the nature of the risk involved.
➤ TABLE 13: SENSITIVITY OF REVENUES TO GENERAL INTEREST-RATE RISK BASED ON A 100 BASIS POINT INCREASE IN INTEREST RATES:
31 December 2010 In millions of euro Euros Other currencies Total Sensitivity of 2011 revenues (44) 5 (39)
31 December 2009 In millions of euro Euros Other currencies Total Sensitivity of 2010 revenues (44) 70 26
Since the books of fi nancial instruments resulting from the Group’s interest-rate risk over all time horizons. The sensitivity of the value to banking intermediation activities are not intended to be sold, they are a 200 basis point increase in interest rates is below 1% of the Group’s not managed on the basis of their value. Nonetheless, the sensitivity of regulatory capital, compared with the limit of 20% laid down in the Basel the value of these books is calculated in order to measure the overall regulations.
162 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Hedging of interest rate and foreign exchange contraction, in relation to both loans (due to loan renegotiations) and risks deposits (pressure on margins of deposits at market rates). Hedging relationships initiated by the Group mainly consist of interest The hedges comprising derivatives and options are typically accounted rate or currency hedges in the form of swaps, options and forwards. for as fair value hedges or cash fl ow hedges. They may also take the form Depending on the hedging objective, derivative fi nancial instruments used of government securities and are mostly accounted in the “Available For for hedging purposes are qualifi ed as either fair value hedges, cash owfl Sale” category. hedges, or hedges of net investments in foreign operations. Each hedging Following the amendment to the accounting standard on options used as relationship is formally documented at inception. The documentation cash fl ow hedges, which states that their time value must be recognised in describes the hedging strategy; identifies the hedged item and the the profi t and loss account, BNP Paribas opted to reclassify its entire stock hedging instrument, and the nature of the hedged risk; and describes of corresponding options in the trading portfolio at 31 December 2009. the methodology used to test the expected (prospective) and actual The time value of the options used as hedging instruments traded since (retrospective) effectiveness of the hedge. this date is recognised in the profi t and loss account.
Interest rate risk in the banking book Structural foreign exchange risk The Bank’s strategy for managing global interest rate risk is based on Currency hedges are contracted by the ALM department in respect of the closely monitoring the sensitivity of the Bank’s earnings to changes in Group’s investments in foreign currencies and its future foreign currency interest rates. In this way, it can determine how to achieve an optimum revenues. Each hedging relationship is formally documented at inception. level of offset between different risks. This procedure requires an The documentation describes the hedging strategy, identifi es the hedged extremely accurate assessment of the risks incurred so that the Bank item and the hedging instrument, and the nature of the hedged risk and can determine the most appropriate hedging strategy, after taking into describes the methodology used to test the expected (prospective) and account the effects of netting the different types of risk. These hedging actual (retrospective) effectiveness of the hedge. strategies are defi ned and implemented by business line and for each 4 A hedging relationship is applied and documented for investments portfolio and currency. fi nanced by foreign currency loans so that impacts of movements in During 2010, market conditions were marked by the extension and exchange rates can be recorded in a symmetrical fashion and have no indeed reinforcement of the non-conventional measures taken by central impact on the profi t and loss account. These instruments are designated banks to boost liquidity in the capital markets and by heavy pressure as net investment hedges. on certain sovereign issuers in the euro zone. While short-term rates A similar hedging relationship is set up to hedge the foreign exchange stayed relatively stable, long-term rates recorded a steep decline at risk on net foreign currency assets of consolidated branches and the beginning of the year, before moving back close to their year-end subsidiaries. Fair value hedges are used to hedge the currency risk on 2009 levels. equity investments in non-consolidated companies. During 2010, only During 2010, the balance between loan production and infl ows of xed-fi negligible amounts of hedges in net investments were disqualifi ed from rate deposits and those showing little correlation with market rates hedge accounting. differed fairly significantly from one euro zone domestic market to The Group hedges the variability of components of BNP Paribas’ earnings, another: in particular the highly-probable future revenue streams (mainly interest ■ in France, the stability of the loan-to-deposit ratio is the result of the income and fees) denominated in currencies other than the euro net effect of the strong levels of production of fi xed-rate home loans generated by the Group’s main businesses, subsidiaries or branches. owing to the low level of long-term rates on the one hand and growth in non-interest bearing deposits and savings accounts on the other Hedging of financial instruments recognised in the balance hand, as these show more correlation with the direction of short-term sheet (fair value hedges) rates and infl ation. The net hedging requirement for fi xed-rate loans Fair value hedges of interest rate risks relate either to identifi ed fi xed- was accentuated by the impact of fi nancing for subsidiaries specialised rate assets or liabilities, or to portfolios of fi xed-rate assets or liabilities. in loans to consumers and businesses; Derivatives are contracted to reduce the exposure of the fair value of these instruments to changes in interest rates. ■ in Italy, commercial activity did not generate any signifi cant shift in the interest-rate position, given the larger proportion of loan production Identifi ed assets consist mainly of available-for-sale securities; identifi ed accounted for by fl oating-rate mortgage loans; liabilities consist mainly of debt issued by the Group. ■ in Belgium and Luxembourg, the year was marked by further strong Hedges of portfolios of fi nancial assets and liabilities, constructed by infl ows of customer deposits, notably into savings accounts. At the currency, relate to: same time, a higher proportion of mortgage loan production was ■ fi xed-rate loans (property loans, equipment loans, consumer credit generated by floating-rate products, giving rise to a net hedging and export loans); requirement for customer deposits that show only moderate correlation with market rates. ■ fi xed-rate customer deposits (demand deposits, funds deposited under home savings contracts). Accordingly, the hedging strategies implemented in 2010 varied from one domestic market to another. Derivative-based strategies (in the To identify the hedged amount, the residual balance of the hedged item is form of swaps) were supplemented by hedges of optional risks of margin split into maturity bands, and a separate amount is designated for each band. The maturity split is determined on the basis of the contractual
2010 Registration document and fi nancial report - BNP PARIBAS 163 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
terms of the transactions and historical observations of customer Cash Flow Hedge behaviour (prepayment assumptions and estimated default rates). In terms of interest rate risk, the Group uses derivative instruments to Demand deposits, which do not bear interest at contractual rates, are hedge fl uctuations in income and expenses arising on oating-ratefl assets qualifi ed as fi xed-rate medium-term fi nancial liabilities. Consequently, and liabilities. Highly probable forecast transactions are also hedged. the value of these liabilities is sensitive to changes in interest rates. Hedged items are split into maturity bands by currency and benchmark Estimates of future cash outfl ows are based on historical analyses. No interest rate. After factoring in prepayment assumptions and estimated allowance is made prospectively for the effects of potential increases in default rates, the Group uses derivatives to hedge some or all of the risk customer wealth or for the effects of infl ation. exposure generated by these fl oating-rate instruments. For each hedging relationship, expected hedge effectiveness is measured In terms of foreign exchange risk, the Group hedges against variability by ensuring that for each maturity band, the fair value of the hedged in components of consolidated earnings. In particular, the Group may items is greater than the fair value of the designated hedging instruments. hedge future revenue fl ows (especially interest and fee/commission income) derived from operations carried out by its main subsidiaries Actual effectiveness is assessed on an ex-post basis by ensuring that the and/or branches in a currency other than their functional currencies. As monthly change in the fair value of hedged items since the start of the in the case of interest rate hedges, the effectiveness of these hedging month does not indicate any over-hedging. relationships is documented and assessed on the basis of forecast maturity bands.
The table below concerns the scope of BNP Paribas SA’s medium- and long-term transactions and shows the amount of hedged future cash fl ows (split 4 by forecast date of realisation), which constitute the majority of the Group’s transactions. ➤ TABLE 14: CASH FLOWS HEDGED
In millions of euros 31 December 2010 31 December 2009 Less than 1 More than Less than 1 More than Period to realisation year 1 to 5 year 5 years Total year 1 to 5 year 5 years Total Cash fl ows hedged 186 556 607 1,350 115 244 332 691
In the year ended 31 December 2010, only one hedge of future income representing a non-material amount was requalifi ed as ineligible for hedge accounting on the grounds that the related future event would be no longer highly probable (see note 2.c).
4.f OPERATIONAL RISK Objectives and principles To meet this dual requirement of measuring and managing operational Risk management framework risk, BNP Paribas has developed a fi ve-stage iterative risk management process: Regulatory framework ■ identifying and assessing operational risks; Operational risk management is governed by a strict regulatory ■ formulating, implementing and monitoring permanent controls, framework: including procedures, checks and all organisational elements designed ■ Basel II, which requires the allocation of capital to operational risk; to help to control risk, such as segregation of tasks, management of ■ Regulation CRBF 97-02 as amended, which requires implementation of clearance rights, etc.; a risk management system covering all types of risk and an internal ■ producing risk measures and calculating the capital charge for control system that ensures the effectiveness and quality of the Bank’s operational risk; internal operations, the reliability of internal and external information, ■ reporting and analysing oversight information relating to the the security of transactions and compliance with all laws, regulations permanent operational control process; and internal policies. ■ managing the system through a governance framework that involves members of management, preparing and monitoring action plans.
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Reporting Monitoring
Risk Process & Controls Assessment Organisation
Risk identification and assessment
There are two key components to the system, which are structuring in ■ Specialised teams, who are present at every level of the Group scope and illustrate the complementary nature of the Group’s operational (core businesses, retail operational entities, functions, business risk and permanent control systems: lines) and coordinated centrally by the 2OPC team (Oversight of 4 Operational Permanent Control), which is part of Group Compliance ■ calculating capital requirements for the BNP Paribas scope excluding and a participant in the Group’s risk management process. 2010 saw Fortis is based on a hybrid approach that combines an internal model an evolution in the role of these teams, with their missions being with the standardised approach for other entities in the consolidation refocused on two areas: scope. Under the Advanced Measurement Approach (AMA), loss distributions are modelled and calibrated using two sets of data: ■ coordinating throughout the areas within their remit the defi nition historical event data since 2002 for the BNP Paribas Group and the and implementation of the permanent control and operational risk major international banks, and internally constructed potential event management system, its standards and methodologies, reporting scenarios to take better account of the extreme risks to which the Bank and related tools;
is exposed. This model was approved by the French banking supervisor ■ acting as a second pair of eyes that is independent of the operational (Autorité de Contrôle Prudentiel) in 2008; managers to scrutinise operational risk factors and the functioning ■ widespread use of control plans: BNP Paribas has embarked on a of the operational risk and permanent control system, and issuing process of formulating “control plans”, which have three objectives: warnings, where appropriate. harmonising practices, rationalising the system and standardising More than 300 employees on a full-time equivalent basis are responsible controls. The project will also cover the Group’s international for these supervisory activities. operations and thereby support its growth. It is based on a risk Issues that arise in relation to permanent operational risk management mapping exercise carried out to identify and quantify potential risk and business continuity are discussed with the Group’s Executive scenarios, involving all the Group’s core businesses, operational Committee on a regular basis, and periodically with the Internal Control entities, business lines and Group functions. Coordination Committee. This committee is chaired by the Internal Key players and governance Control Coordinator and brings together key players in the internal The BNP Paribas Group’s objective is to implement a permanent control control process. The Group’s core businesses, retail operational entities, and operational risk management system organised around two types business lines and functions tailor this governance structure to their own of participants: organisations, with the participation of Executive Management. Most other Group entities, particularly the major subsidiaries, have set up a ■ Heads of operational entities, who are on the front line of risk similar structure. management and implementation of systems to manage these risks.
2010 Registration document and fi nancial report - BNP PARIBAS 165 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Scope and nature of risk reporting and ■ the Legislation Tracking Committee, which monitors draft legislation, measurement and analyses, interprets and distributes throughout the Group the Group Executive Committees, core businesses, retail operational texts of new laws and regulations, as well as details of changes in entities, business lines and functions are tasked with overseeing the French and European case law, management of operational and non-compliance risk and permanent ■ the Legal Internal Control Committee, whose focuses include control in the areas falling within their remit, in accordance with the overseeing operational risk, Group’s operational risk framework. The committees validate the quality ■ the Litigation Committee, which deals with major litigation and consistency of reporting data, examine their risk profi le in light of proceedings in which the Group is the plaintiff or defendant; the tolerance levels set and assess the quality of risk control procedures ■ the participation of the Director of Legal Affairs (or one of his/her in light of their objectives and the risks they incur. They monitor the representatives) as a standing member of the Internal Control, Risk implementation of risk mitigation measures. and Compliance Committee; Operational risk management has developed a system of data collection of ■ internal procedures and databases providing a framework for (i) actual or potential incidents using an approach structured by operational managing legal risk, in collaboration with the Compliance Function for process and entity (activities in a country and a single legal entity) all matters which also fall under their responsibility, and (ii) overseeing focusing on the cause-and-effect chain behind events. This information the activities of the Group’s legal staff and operating staff involved in is used as the basis for risk mitigation and prevention measures. legal areas. At the end of 2004, a procedures database detailing all The most signifi cant information is brought to the attention of staff at internal procedures was set up on the Group intranet; various levels of the organisation, up to and including executive and ■ legal reviews, which are carried out in Group entities to ensure that decision-making bodies, in line with a predefi ned information reporting local systems for managing legal risks are appropriate, legal risks are process. properly managed and tools correctly used. Regular visits are made, 4 particularly to countries deemed the most vulnerable, in order to check Merger of BNP Paribas with the BNP Paribas the effectiveness of the systems developed by international units for and BGL BNP Paribas entities managing legal risks; The Fortis Group entities acquired by BNP Paribas have a very ■ internal reporting tools and analytical models, which are upgraded similar operational risk management system to that of BNP Paribas. on an ongoing basis by Group Legal Department and contribute to the BNP Paribas Fortis and BGL BNP Paribas are AMA approved by the CBFA identifi cation, assessment and analysis of operational risk. and have established a system that analyses historical incidents and 2010 was marked by the launch of analysis and working groups aimed at forward-looking data. In time, the BNP Paribas Group’s system will be making the legal teams more pro-active and promoting a single quality extended to encompass BNP Paribas Fortis and BGL BNP Paribas, and standard for legal services throughout the Group. Several priorities were the teams of BNP Paribas Fortis and BGL BNP Paribas are gradually being identifi ed, such as increasing the monitoring of legal issues at European trained in BNP Paribas’ methods and standards. level, expanding the control framework for external contracting and knowledge management. Components of operational risk related to legal, tax and information security risks Tax risk In each country where it operates, BNP Paribas is bound by specifi c local Legal risk tax regulations applicable to companies engaged for example in banking, In each country where it operates, BNP Paribas is bound by specifi c local insurance or fi nancial services. regulations applicable to companies engaged in banking, insurance and The Group Tax Department is a global function, responsible for overseeing fi nancial services. The Group is notably required to respect the integrity the consistency of the Group’s tax affairs. It also shares responsibility for of the markets and the primacy of clients’ interests. monitoring global tax risks with Group Development and Finance. The For many years, the Legal Department has had an overarching internal Group Tax Department performs controls to ensure that tax risks remain control system designed to anticipate, detect, measure and manage legal at an acceptable level and are consistent with the Group’s reputation risks. The system is organised around: and profi tability objectives.
■ specifi c committees: To ensure its mission, the Group Tax Department has established:
■ the Executive Legal Affairs Committee, ■ a network of dedicated tax specialists in 16 countries completed by tax correspondents covering other countries where the Group operates; ■ the Global Legal Committee, which coordinates the activities of the legal function throughout the Group in all countries that have ■ a qualitative data reporting system in order to manage tax risks and their own legal staff, and ensures that the Group’s legal policies assess compliance with local tax laws; are consistent and applied in a uniform manner, ■ regular reporting to Group Executive Management on the use made of delegations of authority and compliance with internal standards.
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The Group Tax Department co-chairs the Tax Coordination Committee The availability of information systems is vital to allow BNP Paribas to with Group Development and Finance. The committee also includes continue operating in a crisis or emergency. Although it is impossible to the Compliance Function and may involve the core businesses when guarantee 100% availability, the Group maintains, improves and regularly appropriate. It is responsible for analysing key tax issues for the Group. verifi es the information back-up capabilities and system robustness, in line with its values of operational excellence, in response to tighter In addition, Group Development and Finance is obliged to consult regulations and extreme stress scenarios (natural disasters or other the Group Tax Department on any tax issues arising on transactions catastrophes, health pandemics, etc.). Its action in this area is consistent processed. with the Group’s general business continuity plan. ■ Lastly, the Group Tax Department has drawn up procedures covering BNP Paribas seeks to minimise information security risk and optimise all core businesses, designed to ensure that tax risks are identifi ed, resources by: addressed and controlled appropriately. ■ setting up a procedural framework for each business line governing Information security day-to-day data production and management of existing software and Information is a key commodity for banks and effective management of new applications; information security risk is vital in an era of near full-scale migration ■ raising employees’ awareness of information security imperatives and to electronic media, growing demand for swift online processing of ever training key players in the appropriate procedures and behaviours more sophisticated transactions, and widespread use of the internet related to information system resources; or multiple networks as the primary interface between a bank and its ■ individual or institutional customers. adopting a formal approach for evaluating systems and improving management of security risks through measurable key performance Incidents reported in different countries involving banking and credit/ indicators and action plans. This approach is applicable to business payment card industries highlight the increased need for vigilance. This projects and shared information system architecture and applications, topic has been reiterated by regulations and case law on data protection. and is embedded within the Group’s system of permanent and periodic 4 The rules governing information security at BNP Paribas are set out in controls; various types of reference documents. These include a general security ■ monitoring incidents and developing intelligence of technological policy; more specifi c policies for various issues related to information vulnerability and information systems attacks. systems security; ISO 27001 requirements; practical guides to security requirements; and operational procedures. Insurance policies The security framework is drilled down to each individual business Risks incurred by the BNP Paribas Group may be covered by major line, taking account of any regulatory requirements and the risk insurers with the dual aim of protecting its balance sheet and profi t appetite of the business line in question. It is governed by the Group’s and loss account. general security policy. Each business line takes the same approach to managing information security. The primary methodology used is ISO The Group’s insurance policy is based on an in-depth identifi cation of 27005, supported by the French methodology EBIOS, common objective risks underpinned by detailed operating loss data. The risks identifi ed indicators, control plans, residual risk assessments and action plans. This are then mapped and their impact quantifi ed. approach is part of the permanent and periodic control framework set up The Group purchases insurance from leading insurers in the market for each banking activity pursuant to CRBF regulation 97-02 (amended in covering fraud, theft, property and casualty, business disruption, liability 2004) in France and similar regulations in other countries. and other risks for which it may be held responsible. Each of BNP Paribas’ business lines is exposed to some specifi c form In order to optimise costs and effectively manage its exposure, the Group of information security risk, with some risks common to all businesses. self-insures some well identifi ed risks whose impact in terms of frequency The Group’s policy for managing these risks takes into consideration the and cost is known or can be adequately estimated. specifi c nature of the business, often made more complex by legally and In selecting insurers, the Group pays close attention to the credit rating culturally-specifi c regulations in the different countries in which the and claims paying ability of the companies concerned. Group does business. Detailed information on risks incurred by BNP Paribas as well as risk BNP Paribas takes a continuous progress approach to information security. assessment visits, enable insurers to assess the quality of coverage and Apart from investing heavily in protecting its information systems assets risk prevention within the Group, as well as the safeguard measures and information resources, the level of security must be supervised and put in place and upgraded on a regular basis in light of new standards controlled continuously. This enables the Bank to adjust swiftly to new and regulations. threats caused by cyber crime. One of the effects of this continuous progress approach is that investments are made at Group level to develop and improve the management of authorisations and controls over access to the most important applications used by the business lines.
2010 Registration document and fi nancial report - BNP PARIBAS 167 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
4.g COMPLIANCE AND REPUTATION RISKS Liquidity risk management policy
Effective management of compliance risk is a core component of the Policy objectives Bank’s internal control framework and covers adherence to applicable laws, regulations, codes of conduct and standards of good practice. The objectives of the Group’s liquidity management policy are to (i) Compliance also involves protecting the Group’s reputation as well as the secure a balanced fi nancing mix to support BNP Paribas’ development reputation of its investors and customers; ensuring that members of staff strategy; (ii) ensure that the Group is always in a position to discharge act in an ethical manner and avoid confl icts of interest; protecting the its obligations to its customers; (iii) ensure that it does not trigger a interests of its customers and the integrity of the market; implementing systemic crisis solely by its own actions; (iv) comply with the standards anti-money laundering procedures, combating corruption and terrorist set by the local banking supervisor; (v) keep the cost of refi nancing as fi nancing; and respecting fi nancial embargos. low as possible; and (vi) cope with any liquidity crises. As required by French regulations, the Compliance Function manages Roles and responsibilities in liquidity risk compliance risk for all of the Group’s domestic and international management businesses. The Compliance Function reports to the Chief Executive Offi cer The Group’s Executive Committee sets the general liquidity risk and has direct, independent access to the Board’s Internal Control, Risk management policy, including risk measurement principles, acceptable and Compliance Committee. risk levels and the internal billing system. Responsibility for monitoring The function includes a central structure in Paris responsible for and implementation has been delegated to the Group ALM Committee. overseeing and supervising all compliance matters, and local teams The Internal Control, Risk and Compliance Committee reports quarterly within the Group’s various core businesses, retail operational entities, to the Board of Directors on liquidity policy principles and the Bank’s business lines and functions acting under delegated authority from the position. central team. This system has been reinforced on a regular basis since Group ALM Committee authorizes implementation of the liquidity policy 4 2004. proposed by ALM Treasury, and which relies on the principles set by Management of compliance and reputation risks is based on a system of the Executive Committee. The Executive Committee is notably informed permanent controls built on four axes: on a regular basis of liquidity indicators, results of stress tests, and the execution of fi nancing programmes. It is also informed of any crisis ■ general and specifi c procedures; situation, and is responsible for deciding on the allocation of crisis ■ coordination of action taken within the Group to guarantee the management roles and approving emergency plans. consistency and effectiveness of monitoring systems and tools; After validation by Group ALM Committee, ALM-Treasury is responsible ■ deployment of tools for detecting and preventing money laundering, for implementing the policy at both central and individual entity level. terrorist fi nancing and corruption, and detecting market abuses, etc.; The business line and entity ALM Committees implement at local level ■ training, both at Group level and in the divisions and business lines. the strategy approved by Group ALM Committee. Protecting the Bank’s reputation is high on the Group’s agenda. It GRM contributes to defi ning liquidity policy principles. It also provides requires ongoing revisions to the risk management policy in line with second-line control by validating the models, risk indicators (including developments in the external environment. The Group has strengthened liquidity stress tests), limits and market parameters used. GRM is a its anti-money laundering, terrorist fi nancing and corruption techniques member of Group ALM Committee and the business lines / entities ALCOs. due to the international climate, the increasing number of fraudulent practices and the introduction of tighter regulations by many countries. Centralised liquidity risk management Following discussion with the US Department of Justice and the New Liquidity risk is managed centrally by ALM-Treasury across all maturities. York County District Attorney’s Offi ce, the Bank has decided to conduct The Treasury unit is responsible for refi nancing and for short-term issues an internal review of certain U.S. dollar payments involving countries, (certifi cates of deposit, commercial paper, etc.), while the ALM unit is persons and entities that could be subject to U.S. sanctions. responsible for senior and subordinated debt issues (MTNs, bonds, medium/long-term deposits, covered bonds, etc), preferred share issues, and loan securitisation programmes for the retail banking business and 4.h LIQUIDITY AND REFINANCING RISK the fi nancing business lines within Corporate and Investment Banking. ALM-Treasury is also tasked with providing fi nancing to the Group’s core Liquidity and refi nancing risk is the risk of the Bank being unable to fulfi l businesses, operational entities and business lines, and investing their current or future foreseen or unforeseen cash or collateral requirements surplus cash. without affecting routine transactions or its fi nancial position. Liquidity and refi nancing risk is managed through a global liquidity policy approved by Group Executive Management. This policy is based on management principles designed to apply both in normal conditions and in a liquidity crisis. The Group’s liquidity position is assessed on the basis of internal standards, warning fl ags and regulatory ratios.
168 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Liquidity risk management and supervision Risk exposure in 2010
Liquidity risk management and supervision is predicated on the following Consolidated balance sheet evolution four factors: The Group had total assets of EUR 1,998 billion at 31 December 2010. ■ internal standards and indicators at various maturities; The loan-to-deposit ratio (1) stood at 121% at 31 December 2010 ■ regulatory ratios; (unchanged compared with 31 December 2009). ■ available refi nancing capacity; A net total of EUR 1,097 billion in assets were due to be refi nanced at ■ other measures supplementing these indicators. 31 December 2010, representing a drop of EUR 119 billion compared with Liquidity management is based on a full range of internal standards 31 December 2009, deriving in particular from a fall in interbank assets and indicators at various maturities. and those placed with central banks (EUR -49 billion) and a decrease in net trading assets and liabilities (EUR -19 billion) and net accrued income An overnight target is set for each Treasury unit, limiting the amount and expenses (EUR -13 billion). raised on interbank overnight markets. This applies to the major currencies in which the Group operates. This reduction resulted in a corresponding decline in interbank liabilities and repurchase agreements (down EUR -88 billion). The Group’s consolidated liquidity position by maturity (1 month, 3 months, 6 months, then annually to 15 years) is measured regularly by Internal medium and long-term liquidity ratios business line and currency. Over one year liabilities/assets ratio was 86% at the end of Liquidity stress tests are performed, on a regular basis, based on market December 2010 for the consolidated BNP Paribas Group, versus 87% at factors and/or factors specifi c to BNP Paribas that would adversely affect end-December 2009. its liquidity position. Regulatory liquidity ratios Medium and long term liquidity management is mainly based on the 4 medium and long term liabilities vs. assets mismatch analysis. The average one-month regulatory liquidity ratio for BNP Paribas SA (mother company and branches) was 136% in 2010 compared with a At a one year horizon, the liabilities/assets ratio has to be greater than minimum requirement of 100%. 85%. It is also monitored on the 2 to 5 years maturities. This ratio is based on the liquidity schedules of the balance sheet and off-balance sheet Risk mitigation techniques items for all Group entities (contractuals as well as conventionals), under assumptions concerning clients behaviour (anticipated pre-payments on Within the normal course of the liquidity management or in the event loans, modelling customer behaviour for regulated savings accounts) or of a liquidity crisis, the Group’s most liquid assets constitute a fi nancing under a number of conventions. reserve enabling the Bank to adjust its treasury position by selling them in the open market, in the repo market or by pledging them as collateral In addition, regulatory ratios complete the liquidity risk management to a central bank. framework. Less liquid assets may be transformed into liquid assets by securitising These include the 1-month liquidity ratio, which is calculated monthly for pools of loans granted to retail banking clients as well as pools of the parent company BNP Paribas SA (French operations and branches) corporate loans. and separately by each subsidiary concerned by the regulations. The diversifi cation of the fi nancing sources by market, maturity and Foreign subsidiaries and branches may be required to comply with local structure carried on during 2010. regulatory ratios. Accordingly, the Group also expanded its sources of funding through The available refi nancing capacity required to cope with an unexpected the collateralisation of assets (increased volumes and pool allocation surge in liquidity needs is regularly measured at Group level. It mainly strategy). As a result, the secured debt (with an initial maturity of over comprises available securities and loans eligible for central bank 1 year) issued in 2010 are the following: refinancing, available ineligible securities that can be sold under repurchase agreements or immediately on the market, and overnight ■ EUR 5.7 billion BNP Paribas Home Loan Covered Bonds issues, with US loans not bound to be renewed. dollars 2 billion inaugural issue, 5 years maturity; These arrangements are supplemented by additional measures: ■ EUR 2 billion BNP Paribas Public Sector SCF issues (two EUR 1 billion diversifi cation of BNP Paribas’ sources of short-term funds on a worldwide issues, maturities 10 years and 5 years); basis to ensure that it is not dependent on a too limited number of capital ■ EUR 0.8 billion borrowed from CRH (Caisse de Refi nancement de providers, monitoring of trends in liquidity spreads and the renewal of l’Habitat). market-based funding. Liabilities from “deposit product line”, set up in order to diversify the corporates and institutional depositors base, rose by 13% at EUR 19 billion. Accordingly, the interbank borrowing advances decrease in 2010.
(1) Repos not distributed via the networks have been excluded in the calculation of this ratio.
2010 Registration document and fi nancial report - BNP PARIBAS 169 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Liabilities raised by the Bank in the markets with an initial maturity of Surrender risk over 1 year came to EUR 36.5 billion in 2010 (EUR 45.7 billion in 2009), Savings contracts include a surrender clause allowing insured people mainly in euros, US dollars, yen and Australian dollars. In addition, senior to request reimbursement of all or part of their accumulated savings. issues with a maturity of 1 year were launched raising EUR 7.3 billion, The insurer is exposed to the risk of surrender rates being higher than chiefl y in euros, US dollars and sterling. the forecasts used for ALM purposes, which may force it to sell assets at a loss. Proprietary securitisations The surrender risk is limited, however, as: (See the section on Proprietary securitisation in note 4.d). ■ most policies provide for the temporary suspension of surrender rights in the event that the insurer’s fi nancial position were to be severely impaired such that the surrenders would deprive other policyholders 4.i INSURANCE RISKS of the ability to exercise their rights; ■ The insurance subsidiaries’ risk exposures result from the sale, in France policyholder behaviour is monitored on an ongoing basis, in order to and abroad, of savings and protection contracts. regularly align the duration of assets with that of the corresponding liabilities and reduce the risk of abrupt, large-scale asset sales. Changes in assets and liabilities are projected over periods of up to Financial risks 40 years, in order to identify mismatches giving rise to a liquidity risk. Financial risks arise mainly in the Savings business, which accounts for These analyses are then used to determine the choice of maturities over 95% of the insurance subsidiaries’ liabilities. for new investments and the assets to be sold; There are three types of fi nancial risk: ■ in addition to the guaranteed yield, policyholders are paid dividends that raise the total yield to a level in line with market benchmarks. 4 Interest rate risk These dividends, which are partly discretionary, reduce the risk of an Policyholder yields on non-unit-linked life insurance policies are based increase in surrender rates in periods of rising market interest rates; on either a fi xed rate specifi ed in the policy or a variable rate, with or ■ the return on fi nancial assets is protected mainly through the use of without a fi xed fl oor rate. All of these policies give rise to an interest rate hedging instruments. risk, corresponding to the risk that the return on admissible assets (i.e. assets acquired by investing premiums) is less than the contractual yield Unit-linked contracts with a capital guarantee payable to policyholders. The carrying amount of linked liabilities is equal to the sum of the fair values of the assets held in the unit-linked portfolios. The insurer’s This risk is managed centrally by the BNP Paribas Assurance Asset/ liability is therefore covered by corresponding assets. The match between Liability Management unit, which coordinates its activities with the linked liabilities and the related assets is checked at monthly intervals. BNP Paribas ALM-Treasury Department. Regular asset-liability matching reviews are performed to measure and manage the fi nancial risks, based Certain unit-linked contracts include whole life cover providing for the on medium and/or long-term income statement and balance sheet payment of a death benefi t at least equal to the cumulative premiums projections prepared according to various economic scenarios. The results invested in the contract, whatever the conditions on the fi nancial markets of these reviews are analysed in order to determine any adjustments to at the time of the insured’s death. The risk on these contracts is both assets (through diversifi cation, use of derivatives, etc.) that are required statistical (probability of a claim) and fi nancial (market value of the units). to reduce the risks arising from changes in interest rates and asset values. The capital guarantee is generally subject to certain limits. In France, for In France, to cover future potential fi nancial losses, estimated over the example, most contracts limit the guarantee to one year and a maximum life of the policies, a provision for future adverse deviation (provision of EUR 765,000 per insured. In addition, the guarantee is not normally pour aléas fi nanciers) is booked when total amount of technical interest available beyond the insured’s 80th birthday. plus the guaranteed yield payable to policyholders through technical The capital guarantee reserve is (re)assessed every quarter and takes reserves is not covered by 80% of the yield on the admissible assets. No into account the probability of death, based on a deterministic scenario, provision for future adverse deviation was booked at 31 December 2010 or and stochastic analyses of changing fi nancial market prices. The capital 2009 as the yields guaranteed by the insurance subsidiaries are low and guarantee reserve amounted to EUR 16 million at 31 December 2010 the guarantees are for short periods, resulting in only limited exposure. (versus EUR 19 million at 31 December 2009).
170 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Insurance underwriting risks Risk exposures are monitored at quarterly intervals by BNP Paribas Assurance’s Executive Committee, based on an analysis of loss ratios. The insurance underwriting risks arise mainly in the Protection Business Line, which accounts for some 5% of the insurance subsidiaries’ liabilities. Loan protection insurance covers death, total or partial disability, loss of employment and fi nancial loss risks for personal loans and home They result mainly from the sale of loan protection insurance worldwide loans. The insurance book comprises a very large number of individual and other personal risk insurance (individual death and disability, policies representing low risks and low premiums. Margins depend on extended warranty, annuity policies in France). the size of the insurance book, effective pooling of risks and tight control The actuarial oversight system set up to prevent and control actuarial of administrative costs. risks in France and internationally is based on guidelines and tools Loss ratios for annuity contracts are based on mortality tables applicable that describe (i) the principles, rules, methods and best practices to under insurance regulations, adjusted in some cases by portfolio specifi c be followed by each actuary throughout the policies’ life cycle, (ii) the data which is certifi ed by independent actuaries. Annuity risks are low. tasks to be performed by the actuaries and their reporting obligations and (iii) practices that are banned or that are allowed only if certain Actual loss ratios are compared with forecast ratios on a regular basis conditions are met. by the actuarial department, and premium rates are adjusted when necessary. Underwriting limits are set at various local and central levels, based on capital at risk, estimated maximum acceptable losses and estimated The insurance subscription risks are covered by various technical margins on the policies concerned. The experience acquired in managing reserves, including the unearned premiums reserve generally calculated geographically diversifi ed portfolios is used to regularly update risk on an accruals basis policy-by-policy, the outstanding claims reserve, pricing databases comprising a wide range of criteria such as credit determined by reference to reported claims, and the IBNR (claims risk, the type of guarantee and the insured population). Each contract is incurred but not reported) reserve, determined on the basis of either priced by reference to the margin and return-on-equity targets set by observed settlements or the expected number of claims and the average the Executive Management of BNP Paribas Assurance. cost per claim. 4
2010 Registration document and fi nancial report - BNP PARIBAS 171 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Note 5 NOTES TO THE BALANCE SHEET AT 31 DECEMBER 2010
5.a FINANCIAL ASSETS, FINANCIAL and certain assets and liabilities designated by the Group as at fair value LIABILITIES AND DERIVATIVES AT FAIR through profi t or loss at the time of acquisition or issue. VALUE THROUGH PROFIT OR LOSS Financial assets and fi nancial liabilities at fair value through profi t or loss consist of held for trading transactions (including derivatives)
31 December 2010 31 December 2009 Assets Assets designated designated at fair value at fair value through through profi t or profi t or In millions of euros Trading book loss TOTAL Trading book loss TOTAL FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS Negotiable certifi cates of deposit 51,612 147 51,759 59,260 398 59,658 4 Treasury bills and other bills eligible for central bank refi nancing 39,260 - 39,260 41,695 3 41,698 Other negotiable certifi cates of deposit 12,352 147 12,499 17,565 395 17,960 Bonds 102,454 6,985 109,439 88,421 6,608 95,029 Government bonds 69,704 489 70,193 56,876 501 57,377 Other bonds 32,750 6,496 39,246 31,545 6,107 37,652 Equities and other variable-income securities 68,281 42,901 111,182 58,393 38,892 97,285 Repurchase agreements 210,904 47 210,951 208,810 47 208,857 Loans 725 1,106 1,831 858 3,392 4,250 Trading book derivatives 347,783 - 347,783 363,705 - 363,705 Currency derivatives 31,017 31,017 29,426 29,426 Interest rate derivatives 239,985 239,985 217,983 217,983 Equity derivatives 39,397 39,397 70,239 70,239 Credit derivatives 30,349 30,349 35,528 35,528 Other derivatives 7,035 7,035 10,529 10,529 TOTAL FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 781,759 51,186 832,945 779,447 49,337 828,784 of which loaned securities 30,565 30,565 25,545 25,545 FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS Borrowed securities and short selling 102,060 - 102,060 83,214 - 83,214 Repurchase agreements 223,362 - 223,362 209,293 - 209,293 Borrowings 1,170 2,178 3,348 1,884 2,962 4,846 Debt securities (note 5.h) - 47,735 47,735 - 52,228 52,228 Subordinated debt - 3,108 3,108 - 3,604 3,604 Perpetual subordinated debt - 1,587 1,587 - 1,915 1,915 Redeemable subordinated debt (note 5.h) - 1,521 1,521 - 1,689 1,689 Trading book derivatives 345,492 - 345,492 356,152 - 356,152 Currency derivatives 30,234 30,234 29,492 29,492 Interest rate derivatives 236,416 236,416 210,798 210,798 Equity derivatives 40,927 40,927 67,762 67,762 Credit derivatives 30,263 30,263 35,466 35,466 Other derivatives 7,652 7,652 12,634 12,634 TOTAL FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS 672,084 53,021 725,105 650,543 58,794 709,337
172 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Financial instruments designated as at fair The CASHES are perpetual securities but may be exchanged for Fortis value through profit or loss SA/NV (renamed Ageas) shares at the holder’s sole discretion at a price of EUR 23.94. However, as of 19 December 2014, the CASHES will be Financial assets designated as at fair value automatically exchanged into Fortis SA/NV shares if the price is equal through profit or loss to or higher than EUR 35.91 for twenty consecutive trading days. The Assets designated by the Group as at fair value through profi t or loss principal amount will never be redeemed in cash. The rights of the include admissible investments related to unit-linked insurance business, CASHES holders are limited to the 125,313,283 Fortis SA/NV shares and to a lesser extent assets with embedded derivatives that have not that Fortis Bank acquired on the date of issuance of the CASHES and been separated from the host contract. pledged to them: they are recognised as fi nancial assets and measured at fair value through profi t or loss, which amounted to EUR 214 million Admissible investments related to unit-linked insurance business at 31 December 2010 (EUR 328 million at 31 December 2009). Fortis include securities issued by the Group’s consolidated entities, which SA/NV and Fortis Bank have entered into a Relative Performance Note are not eliminated upon consolidation in order to keep the figures (RPN) contract, the value of which varies contractually so as to offset shown in respect of the assets invested under these contracts at the impact on Fortis Bank of the relative difference between changes in the same level as the technical reserves set aside in respect of the the value of the CASHES and changes in the value of the Fortis SA/NV corresponding policyholder liabilities. The fixed-income securities shares. At 31 December 2010, the value of the RPN was EUR 635 million (certifi cates and EMTNs) not eliminated upon consolidation amounted to (EUR 641 million at 31 December 2009) recognised on the balance sheet EUR 634 million at 31 December 2010 compared with EUR 748 million at under “Derivative instruments held for trading” (Financial assets at fair 31 December 2009 and variable-rate securities (shares mainly issued by value through profi t or loss). On the basis of this RPN value, the debtor BNP Paribas SA) came to EUR 19 million at 31 December 2010 compared pays the creditor interest at 3-month Euribor plus 20 basis points, for with EUR 16 million at 31 December 2009. Eliminating these securities which BNP Paribas has a guarantee from the Belgian government. would not have a material impact on the fi nancial statements for the period. The net balance represents a subordinated liability of EUR 651 million 4 that is permitted for inclusion in Tier 1 capital. Financial liabilities designated as at fair value through profit or loss Derivative financial instruments held for Financial liabilities at fair value through profi t or loss mainly comprise trading issues originated and structured on behalf of customers, where the risk exposure is managed in combination with the hedging strategy. These The majority of derivative fi nancial instruments held for trading are types of issue contain signifi cant embedded derivatives, whose changes in related to transactions initiated for trading purposes. BNP Paribas value are cancelled out by changes in the value of the hedging instrument. actively trades in derivatives so as to meet the needs of its customers. Transactions include trades in ordinary instruments such as credit default ■ The redemption value of fi nancial liabilities designated at fair value swaps, and structured transactions with tailored complex risk profi les. through profi t or loss at 31 December 2010 was EUR 58,356 million The net position is in all cases subject to limits. (EUR 64,475 million at 31 December 2009). Their fair value takes into account any change attributable to issuer risk relating to the Trading account derivative instruments also include derivatives BNP Paribas Group itself in respect of the Group’s conditions of contracted to hedge fi nancial assets or fi nancial liabilities but for which issuance. The carrying value of the liabilities stated at fair value the Group has not documented a hedging relationship, or which do not declined by EUR 457 million (EUR 362 million at 31 December 2009). qualify for hedge accounting under IFRS. This applies in particular to credit derivative transactions which are primarily contracted to protect ■ Subordinated Debt the Group’s loan book. The Group has designated certain subordinated debt as at fair value through profi t and loss in order to eliminate the potential accounting The positive or negative fair value of derivative instruments classifi ed in differences resulting from the embedded derivatives and associated the trading book represents the replacement value of these instruments. securities as a result of hedges. This value may fl uctuate signifi cantly in response to changes in market parameters (such as interest rates or exchange rates). Subordinated debt mainly comprises an issue of Convertible And Subordinated Hybrid Equity-linked Securities (CASHES) made by The table below shows the total notional amount of trading derivatives. Fortis Bank (now BNP Paribas Fortis) in December 2007, for a nominal The notional amounts of derivative instruments are merely an indication amount of EUR 3,000 million and a market value of EUR 1,500 million of the volume of the Group’s activities in fi nancial instruments markets, at 31 December 2010. The interest rate on these securities is 3-month and do not refl ect the market risks associated with such instruments. Euribor plus 2% and interest is paid quarterly in arrears.
2010 Registration document and fi nancial report - BNP PARIBAS 173 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
In millions of euros 31 December 2010 31 December 2009 Trading book derivatives 44,200,645 41,557,195 Currency derivatives 2,019,347 1,746,509 Interest rate derivatives 37,904,560 36,509,248 Equity derivatives 1,703,970 1,540,515 Credit derivatives 2,370,101 1,591,712 Other derivatives 202,667 169,211
Derivatives traded on organised markets represented 45% of the Group’s derivatives transactions at 31 December 2010 (42% at 31 December 2009).
5.b DERIVATIVES USED FOR HEDGING PURPOSES The table below shows the fair values of derivatives used for hedging purposes. 31 December 2010 31 December 2009 In millions of euros Negative fair value Positive fair value Negative fair value Positive fair value FAIR VALUE HEDGES 7,736 3,788 7,658 3,348 4 Currency derivatives 1 1 10 6 Interest rate derivatives 7,681 3,787 7,554 3,306 Other derivatives 54 - 94 36 CASH FLOW HEDGES 740 1,647 445 1,591 Currency derivatives 137 62 40 47 Interest rate derivatives 360 1,422 375 1,210 Other derivatives 243 163 30 334 NET FOREIGN INVESTMENT HEDGES 4 5 5 13 Currency derivatives 4 5 5 13 DERIVATIVES USED FOR HEDGING PURPOSES 8,480 5,440 8,108 4,952
The total notional amount of derivatives used for hedging purposes stood at EUR 577,464 million at 31 December 2010, compared with EUR 482,932 million at 31 December 2009. Derivatives used for hedging purposes are primarily contracted on over-the-counter markets.
174 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
5.c AVAILABLE-FOR-SALE FINANCIAL ASSETS Available-for-sale fi nancial assets are measured at fair value or model value for unlisted securities.
In millions of euros 31 December 2010 31 December 2009 Fixed-income securities 202,561 201,716 Treasury bills and other bills eligible for central bank refi nancing 25,289 20,387 Other negotiable certifi cates of deposit 7,154 7,890 Government bonds 123,907 122,903 Other bonds 46,211 50,536 Variable-income securities 17,397 19,709 Listed securities 9,104 9,700 Unlisted securities 8,293 10,009 TOTAL AVAILABLE-FOR-SALE FINANCIAL ASSETS 219,958 221,425 of which loaned securities 433 651 of which changes in value recognised directly in equity Fixed-income securities (2,554) 2,100 Variable-income securities 2,953 2,299 of which provisions for impairment recognised in the profi t and loss account 4 Fixed-income securities (454) (432) Variable-income securities (3,261) (2,766)
5.d MEASUREMENT OF THE FAIR VALUE OF in unit-linked contract portfolios, where the underlying assets are FINANCIAL INSTRUMENTS appraised from time to time using observable market data, units in funds for which liquidity is provided on a regular basis, derivatives Financial instruments are classifi ed into three levels in descending traded in OTC markets measured using techniques based on observable order of the observability of their value and of the inputs used for their inputs and structured debt issues measured using only observable valuation: inputs; ■ level 1 – Financial instruments with quoted market prices: ■ level 3 - Financial instruments measured using valuation techniques This level comprises fi nancial instruments with quoted prices in an based on non-observable inputs: active market that can be used directly. This level comprises fi nancial instruments measured using valuation It notably includes liquid shares and bonds, borrowings and short techniques based wholly or partially on non-observable inputs. A non- sales of these instruments, derivatives traded on organised markets observable input is defi ned as a parameter, the value of which is derived (futures and options, etc.), and units in funds with net asset value from assumptions or correlations not based either on observable calculated on a daily basis; transaction prices in the identical instrument at the measurement date or observable market data available at the same date. ■ level 2 - Financial instruments measured using valuation techniques based on observable inputs: An instrument is classifi ed in Level 3 if a signifi cant portion of its This level consists of fi nancial instruments measured by reference valuation is based on non-observable inputs. to the price of similar instruments quoted in an active market or to This level notably comprises unlisted shares, bonds measured using identical or similar instruments quoted in a non-active market, but valuation models employing at least one signifi cant non-observable for which transaction prices are readily and regularly available on the input or derived from price data in a non-active market (such as CDO, market or, lastly, instruments measured using valuation techniques CLO and ABS units), long-term or structured repurchase agreements, based on observable inputs. units in funds undergoing liquidation or quotation which have been This level notably includes illiquid shares with low liquidity and suspended, complex derivatives with multiple underlyings (hybrid bonds, borrowings and short sales of these instruments, short-term instruments, synthetic CDOs, etc.) and the structured debt underlying repurchase agreements not measured based on a quoted price directly these derivatives. observed in the market, units in civil property companies (SCIs) held
2010 Registration document and fi nancial report - BNP PARIBAS 175 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Breakdown by measurement method applied to financial instruments recognised at fair value presented in line with the latest recommendations of IFRS 7 31 December 2010 31 December 2009 Valuation Valuation Valuation Valuation techniques techniques techniques techniques Quoted using using non- Quoted using using non- market observable observable market observable observable prices inputs inputs prices inputs inputs In millions of euros, (level 1) (level 2) (level 3) TOTAL (level 1) (level 2) (level 3) TOTAL FINANCIAL ASSETS Financial instruments at fair value through profi t or loss held for trading (note 5.a) 179,814 579,064 22,881 781,759 182,584 571,245 25,618 779,447 Financial instruments designated as at fair value through profi t or loss (note 5.a) 37,356 12,127 1,703 51,186 31,723 15,784 1,830 49,337 Derivatives used for hedging purposes (note 5.b) - 5,440 - 5,440 - 4,952 - 4,952 Available-for-sale fi nancial assets (note 5.c) 163,368 48,436 8,154 219,958 156,736 57,396 7,293 221,425 4 FINANCIAL LIABILITIES Financial instruments at fair value through profi t or loss held for trading (note 5.a) 116,858 529,818 25,408 672,084 107,975 514,237 28,331 650,543 Financial instruments designated as at fair value through profi t or loss (note 5.a) 5,588 38,696 8,737 53,021 5,390 42,831 10,573 58,794 Derivatives used for hedging purposes (note 5.b) - 8,480 - 8,480 - 8,108 - 8,108
176 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
TABLE OF MOVEMENTS IN LEVEL 3 FINANCIAL INSTRUMENTS For Level 3 fi nancial instruments, the following movements occurred between 1 January 2010 and 31 December 2010: Financial Assets Financial Liabilities Financial Financial Financial Financial instruments instruments instruments instruments at fair value designated at fair value designated through as at fair Available- through as at fair profi t or value for-sale profi t or value loss held for through fi nancial loss held for through In millions of euros in 2010 trading profi t or loss assets TOTAL trading profi t or loss TOTAL BEGINNING OF THE PERIOD 25,618 1,830 7,293 34,741 (28,331) (10,573) (38,904) ■ purchases 5,091 463 1,511 7,065 - - ■ issues - - - - (9,206) (3,957) (13,163) ■ sales (979) (139) (1,066) (2,184) --- ■ settlements (2) 819 (240) 30 609 2,106 5,555 7,661 Transfers to level 3 2,436 39 1,688 4,163 (312) (56) (368) Transfers from level 3 (5,716) (361) (1,866) (7,943) 5,553 787 6,340 Gains (or losses) recognised in income (5,027) 111 (97) (5,013) 5,484 (493) 4,991 Changes in fair value of assets and liabilities recognised directly in equity ■ Items related to exchange rate movements 639 - 55 694 (702) - (702) 4 ■ Changes in fair value of assets and liabilities recognised in equity - - 606 606 --- END OF THE PERIOD 22,881 1,703 8,154 32,738 (25,408) (8,737) (34,145) TOTAL GAINS (OR LOSSES) IN THE PERIOD RECOGNISED IN INCOME FOR INSTRUMENTS OUTSTANDING AT THE END OF THE PERIOD 3,469 88 (86) 3,471 (3,461) (531) (3,992)
Financial Assets Financial Liabilities Financial Financial Financial Financial instruments instruments instruments instruments at fair value designated at fair value designated through as at fair Available- through as at fair profi t or value for-sale profi t or value loss held for through fi nancial loss held for through In millions of euros in 2009 trading profi t or loss assets TOTAL trading profi t or loss TOTAL BEGINNING OF THE PERIOD 36,327 2,813 12,117 51,257 (20,333) (10,090) (30,423) ■ purchases (1) 6,840 405 1,556 8,801 (1,952) (368) (2,320) ■ issues - - - - (5,922) (3,842) (9,764) ■ sales (4,115) (1,102) (4,291) (9,508) --- ■ settlements (2) (1,569) (118) (800) (2,487) (3,304) 3,651 347 Reclassifi cations (3) (2,760) - (1,158) (3,918) --- Transfers to level 3 893 36 929 (64) - (64) Transfers from level 3 (1,868) (278) (4) (2,150) 51 - 51 Gains (or losses) recognised in income (10,163) 108 142 (9,913) 4,409 76 4,485 Changes in fair value of assets and liabilities recognised directly in equity ■ Items related to exchange rate movements 2,033 2 79 2,114 (1,216) - (1,216) ■ Changes in fair value of assets and liabilities recognised in equity - - (384) (384) --- END OF THE PERIOD 25,618 1,830 7,293 34,741 (28,331) (10,573) (38,904) TOTAL GAINS (OR LOSSES) IN THE PERIOD RECOGNISED IN INCOME FOR INSTRUMENTS OUTSTANDING AT THE END OF THE PERIOD (3,367) 94 235 (3,038) 3,387 365 3,752 (1) Includes instruments resulting from the consolidation of Fortis Banque by the BNP Paribas Group. (2) For the assets, includes redemptions of principal, interest payments as well as cash infl ows and outfl ows relating to derivatives whose fair value is positive. For the liabilities, includes principal redemptions, interest payments as well as cash infl ows and outfl ows relating to derivatives whose fair value is negative. (3) These are fi nancial instruments initially recognised at fair value and reclassifi ed as loans and receivables.
2010 Registration document and fi nancial report - BNP PARIBAS 177 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
The Level 3 fi nancial instruments may be hedged by other Level 1 and/ These value adjustments help to factor in risks not included in the model or Level 2 instruments, the gains and losses on which are not shown in and the uncertainty inherent in the estimate of the inputs and form a this table. Consequently, the gains and losses shown in this table are not component of the fair value of these portfolios. representative of the gains and losses arising from management of the To measure the sensitivity of the portfolio’s fair value to a change in net risk on all these instruments. More particularly, losses and gains on assumptions, the following two scenarios were considered: a favourable fi nancial assets and liabilities at fair value through profi t or loss held for scenario in which no valuations of Level 3 fi nancial instruments require trading purposes, amounting respectively to EUR 5,027 million and EUR value adjustments for and an unfavourable scenario in which all these 5,484 million at 31 December 2010 (compared with EUR 10,163 million valuations require a model risk value adjustment of double the size. and EUR 4,409 million at 31 December 2009), primarily correspond to changes in the value of CDO positions classifi ed in Level 3 hedged by CDS Based on this method, each position (portfolios of instruments managed positions classifi ed in Level 2. together with netting of risks) is considered individually, and no diversifi cation effect between non-observable inputs of a different type Sensitivity of model values to reasonably likely is taken into account. changes in level 3 assumptions The sensitivity of the fair value of securities positions, be they trading portfolio securities, available-for-sale assets or instruments designated Trading portfolio instruments, which are managed using dynamic risk as at fair value through profi t or loss, is based on a change of 1% in hedging, generally complex derivatives, are subject to value adjustments fair value. For instruments with doubtful counterparties, sensitivity for the portfolio’s model risks. is calculated based on the scenario of a 1% change in the assumed recovery rate.
4 31 December 2010 31 December 2009 Potential impact Potential impact Potential impact Potential impact In millions of euros on income on equity on income on equity Financial instruments at fair value through profi t or loss held for trading or designated as at fair value (1) +/-1 304 +/-1 418 Available-for-sale fi nancial assets +/-91 +/-81 (1) Financial instruments at fair value through profi t or loss are presented under the same heading, whether they are part of the trading portfolio or have been designated at fair value through profi t or loss, as sensitivity is calculated on the net positions in instruments classifi ed as Level 3 regardless of their accounting classifi cation
Deferred margin on financial instruments The day one profit is calculated after setting aside reserves for measured using techniques developed uncertainties as described previously and taken back to profi t or loss over internally and based on inputs partly non- the expected period for which the inputs will be non-observable. The yet observable in active markets to be unamortised amount is included under “Financial instruments held for trading purposes at fair value through profi t or loss” as a reduction Deferred margin on fi nancial instruments (Day One Profi t) only concerns in the fair value of the relevant complex transactions. the scope of market activities eligible for Level 3.
178 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Changes in the deferred margin included in the price of derivatives sold to clients and measured with internal models based on non-observable inputs (Day One Profi t) can be analysed as follows over 2009 and 2010:
In millions of euros 31 December 2010 31 December 2009 Deferred margin at the beginning of the period 860 710 Deferred margin on transactions during the year 437 580 Margin taken to the profi t and loss account during the year (377) (430) Deferred margin at the end of the period 920 860
5.e RECLASSIFICATION OF FINANCIAL INSTRUMENTS INITIALLY RECOGNISED AT FAIR VALUE THROUGH PROFIT OR LOSS HELD FOR TRADING PURPOSES OR AS AVAILABLE-FOR-SALE ASSETS The amendments to IAS 39 and IFRS 7 adopted by the European Union on 15 October 2008 permitted the reclassifi cation of instruments initially held for trading or available-for-sale within the customer loan portfolios or as securities available-for-sale. These reclassifi cations were made during the fourth quarter of 2008 and during the rstfi half of 2009. Data concerning these assets at the date of transfer are as follows: Expected cash fl ows deemed Carrying value recoverable Average effective interest rate 1st half 4th quarter 1st half 4th quarter 1st half 4th quarter 4 In millions of euros of 2009 of 2008 of 2009 of 2008 of 2009 of 2008 Financial assets reclassifi ed from the trading portfolio 2,760 7,844 3,345 8,694 Into loans and receivables due from customers 2,760 7,077 3,345 7,904 8.4% 7.6% Into available-for-sale assets - 767 - 790 6.7% Financial assets reclassifi ed from the available-for-sale fi nancial portfolio 1,158 - 1,479 - Into loans and receivables due from customers 1,158 - 1,479 - 8.4%
The following tables show the items related to the reclassifi ed assets, both as they were recorded during the period and as they would have been recorded if the reclassifi cation had not taken place:
➤ ON THE BALANCE SHEET
31 December 2010 31 December 2009 Market or model Market or model In millions of euros Carrying value value Carrying value value Financial assets reclassifi ed from the trading portfolio 5,746 5,729 6,943 6,921 Into loans and receivables due from customers 5,728 5,711 6,913 6,891 Into available-for-sale assets 18 18 30 30 Financial assets reclassifi ed from the available-for-sale fi nancial portfolio 257 295 874 977 Into loans and receivables due from customers 257 295 874 977
2010 Registration document and fi nancial report - BNP PARIBAS 179 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
➤ IN PROFIT AND LOSS AND AS A DIRECT CHANGE IN EQUITY
Year to 31 December 2010 Year to 31 December 2009 Realised after before In millions of euros Realised Pro forma (1) reclassifi cation (2) reclassifi cation (2) Pro forma (1) In profi t or loss 387 346 92 (218) 564 In interest and related income 373 235 452 - 298 in gains or losses on fi nancial instruments at fair value through profi t or loss 40 138 147 (75) 425 in gains or losses on available-for-sale assets and L&R (4) 3 (88) - (28) in cost of risk (22) (30) (419) (143) (131) In direct change in equity (before tax) 79 65 156 (255) 133 TOTAL PROFIT OR LOSS AND EQUITY ITEMS RECLASSIFIED 466 411 248 (473) 697 (1) Profi t and loss items and direct change in equity (before tax) that would have been generated by the instruments reclassifi ed in 2008 and 2009 had the reclassifi cation not taken place. 4 (2) The impact on profi t and loss items and on direct change in equity (before tax) is recognised separately for instruments reclassifi ed during the year ended 31 December 2009.
5.f INTERBANK AND MONEY-MARKET ITEMS ➤ LOANS AND RECEIVABLES DUE FROM CREDIT INSTITUTIONS
In millions of euros 31 December 2010 31 December 2009 Demand accounts 11,273 16,379 Loans 45,353 45,045 Repurchase agreements 7,086 28,524 TOTAL LOANS AND RECEIVABLES DUE FROM CREDIT INSTITUTIONS, BEFORE IMPAIRMENT PROVISIONS 63,712 89,948 of which doubtful loans 1,466 1,659 Provisions for impairment of loans and receivables due from credit institutions (note 2.f) (994) (1,028) TOTAL LOANS AND RECEIVABLES DUE FROM CREDIT INSTITUTIONS, NET OF IMPAIRMENT PROVISIONS 62,718 88,920
➤ DUE TO CREDIT INSTITUTIONS
In millions of euros 31 December 2010 31 December 2009 Demand accounts 17,464 12,380 Borrowings 131,947 158,908 Repurchase agreements 18,574 49,408 TOTAL DUE TO CREDIT INSTITUTIONS 167,985 220,696
180 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
5.g CUSTOMER ITEMS ➤ LOANS AND RECEIVABLES DUE FROM CUSTOMERS
In millions of euros 31 December 2010 31 December 2009 Demand accounts 28,188 26,474 Loans to customers 633,583 616,908 Repurchase agreements 16,523 25,866 Finance leases 33,063 34,887 TOTAL LOANS AND RECEIVABLES DUE FROM CUSTOMERS, BEFORE IMPAIRMENT PROVISIONS 711,357 704,135 of which doubtful loans 42,100 38,380 Impairment of loans and receivables due from customers (note 2.f) (26,671) (25,369) TOTAL LOANS AND RECEIVABLES DUE FROM CUSTOMERS, NET OF IMPAIRMENT PROVISIONS 684,686 678,766
➤ BREAKDOWN OF FINANCE LEASES
In millions of euros 31 December 2010 31 December 2009 Gross investment 36,261 39,228 4 Receivable within 1 year 9,829 11,666 Receivable after 1 year but within 5 years 18,756 18,985 Receivable beyond 5 years 7,676 8,577 Unearned interest income (3,198) (4,341) Net investment before impairment provisions 33,063 34,887 Receivable within 1 year 9,106 10,549 Receivable after 1 year but within 5 years 16,983 16,833 Receivable beyond 5 years 6,974 7,505 Impairment provisions (1,302) (779) Net investment after impairment provisions 31,761 34,108
➤ DUE TO CUSTOMERS
In millions of euros 31 December 2010 31 December 2009 Demand deposits 262,358 260,962 Term accounts and short-term notes 241,409 234,506 Regulated savings accounts 49,610 46,342 Repurchase agreements 27,536 63,093 TOTAL DUE TO CUSTOMERS 580,913 604,903
2010 Registration document and fi nancial report - BNP PARIBAS 181 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
5.h DEBT SECURITIES AND SUBORDINATED DEBT This note covers all debt securities in issue and subordinated debt measured at amortised cost. Debt securities and subordinated debt measured at fair value through profi t or loss are presented in note 5.a.
Debt securities measured at amortised cost
In millions of euros 31 December 2010 31 December 2009 Negotiable certifi cates of deposit 186,672 191,421 Bond issues 21,997 19,608 TOTAL DEBT SECURITIES AT AMORTISED COST 208,669 211,029
➤ MATURITY SCHEDULE OF MEDIUM- AND LONG-TERM DEBT SECURITIES CARRIED AT AMORTISED COST AND DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
The following table shows a maturity schedule of debt securities carried at amortised cost and designated at fair value through profi t or loss with a maturity at issuance of more than one year: Maturity or call option date 2016 - TOTAL at 31 In millions of euros 2011 2012 2013 2014 2015 2020 After 2020 Dec 2010 Medium- and long-term debt 4 securities carried at amortised cost and designated at fair value through profi t or loss 13,804 16,961 8,833 13,336 9,099 9,733 6,299 78,065 Medium- and long-term debt securities designated at fair value through profi t or loss (note 5.a) 13,350 7,415 5,041 6,075 5,470 6,281 4,103 47,735 TOTAL 27,154 24,376 13,874 19,411 14,569 16,014 10,402 125,800
Maturity or call option date TOTAL at 31 In millions of euros 2010 2011 2012 2013 2014 2015-2019 After 2019 Dec 2009 Medium- and long-term debt securities carried at amortised cost and designated at fair value through profi t or loss 11,041 16,469 17,488 8,494 7,478 5,987 4,732 71,689 Medium- and long-term debt securities designated at fair value through profi t or loss (note 5.a) 12,533 9,230 7,938 4,279 5,645 5,841 6,762 52,228 TOTAL 23,574 25,699 25,426 12,773 13,123 11,828 11,494 123,917
The net carrying value of debt securities carried at amortised cost with a maturity at issuance of less or equal to one year stood at EUR 130,604 million at 31 December 2010 (compared with EUR 139,340 million at 31 December 2009).
Subordinated debt measured at amortised cost
In millions of euros 31 December 2010 31 December 2009 Redeemable subordinated debt 21,423 25,114 Undated subordinated debt 3,327 3,095 Undated fl oating-rate subordinated notes (TSDIs) 459 420 Other undated subordinated notes 1,813 1,708 Undated subordinated debt 820 740 Undated participating subordinated notes 227 223 Issue costs and fees, accrued interest 84 TOTAL SUBORDINATED DEBT AT AMORTISED COST 24,750 28,209
182 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Redeemable subordinated debt Debt issued by BNP Paribas SA or foreign subsidiaries of the Group The redeemable subordinated debt issued by the Group is in the form via placements in the international markets may be subject to early of medium and long-term debt securities, equivalent to ordinary redemption of the capital and early payment of interest due at maturity at subordinated debt; these issues are redeemable prior to the contractual the issuer’s discretion on or after a date stipulated in the issue particulars maturity date in the event of liquidation of the issuer, and rank after the (call option), or in the event that changes in the then applicable tax rules other creditors but before holders of participating loans and participating oblige the BNP Paribas Group issuer to compensate debt-holders for the subordinated notes. consequences of such changes. Redemption may be subject to a notice period of between 15 and 60 days, and is in all cases subject to approval After agreement from the banking supervisory authority and at the issuer’s by the banking supervisory authorities. initiative, these debt issues may contain a call provision authorising the Group to redeem the securities prior to maturity by repurchasing them in the stock market, via public tender offers, or in the case of private placements over the counter.
➤ MATURITY SCHEDULE OF REDEEMABLE SUBORDINATED DEBT CARRIED AT AMORTISED COST AND DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
Maturity or call option date 2016 - TOTAL at 31 In millions of euros 2011 2012 2013 2014 2015 2020 After 2020 Dec 2010 Redeemable subordinated debt carried at amortised cost 500 2,786 2,439 1,439 1,945 11,528 786 21,423 Redeemable subordinated debt 4 designated at fair value through profi t or loss 77 524 181 89 456 132 62 1,521 TOTAL 577 3,310 2,620 1,528 2,401 11,660 848 22,944
Maturity or call option date TOTAL at 31 In millions of euros 2010 2011 2012 2013 2014 2015-2019 After 2019 Dec 2009 Redeemable subordinated debt carried at amortised cost 1,563 868 2,419 1,459 1,170 16,149 1,486 25,114 Redeemable subordinated debt designated at fair value through profi t or loss 254 73 524 182 88 554 14 1,689 TOTAL 1,817 941 2,943 1,641 1,258 16,703 1,500 26,803
Undated subordinated debt Undated floating-rate subordinated notes The various TSDI issues are as follows: In millions of euros Original amount Issuer Issue date Currency in issue currency Rate 31 December 2010 31 December 2009 BNP SA October 1985 EUR 305 million TMO - 0.25% 254 229 6-month Libor BNP SA September 1986 USD 500 million +0.75% 205 191 TOTAL 459 420
2010 Registration document and fi nancial report - BNP PARIBAS 183 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
The TSDIs issued by BNP Paribas are redeemable on liquidation of the are not subject to any interest step up clause. Payment of interest is Bank after repayment of all other debts but ahead of undated participating obligatory, but the Board of Directors may postpone interest payments subordinated notes. They confer no rights over residual assets. if within the twelve months preceding the interest payment date the Ordinary General Meeting of Shareholders approves a decision not to Payment of interest is obligatory on the TSDIs issued in October 1985 pay a dividend. representing a nominal amount of EUR 305 million, but the Board of Directors may postpone interest payments if within the twelve months Other undated subordinated notes preceding the interest payment date the Ordinary General Meeting of The other undated subordinated notes issued by the Group may be Shareholders notes that there is no income available for distribution. redeemed at par prior to maturity on certain dates specifi ed in the issue The TSDIs issued in US dollars in September 1986, contain a specifi c call particulars, after approval of the banking supervisory authorities, and are option provision, whereby they may be redeemed at par prior to maturity entitled to a step up in interest from the fi rst of such dates if the notes at the issuer’s discretion at any time after a date specifi ed in the issue have not been redeemed. particulars, after approval of the banking supervisory authorities. They
In millions of euros Original amount in Redemption issue currency option/interest Interest step up 31 December 31 December Issuer Issue date Currency (in millions) step up date Rate (basis points) 2010 2009 Fortis Luxembourg 6-month Libor 6-month Libor 4 Finance SA February 1995 USD 22 February 2013 +0.835% +250 bp 14 11 Fortis Luxembourg 6-month 6-month Finance SA August 1995 EUR 23 August 2015 Euribor +104 bp Euribor +250 bp 16 15 Fortis Luxembourg 6-month Libor 6-month Libor Finance SA February 1996 USD 35 February 2021 +77 bp +250 bp 9 6 3-month Fortis Bank SA September 2001 EUR 1,000 September 2011 6.500% Euribor +237 bp 968 928 (1) 3-month Fortis Bank SA October 2004 EUR 1,000 October 2014 4.625% Euribor +170 bp 750 688 (1) 3-month Fortis Bank SA June 2009 EUR 75 July 2018 7.500% Euribor +350 bp 55 52 Others 18 TOTAL 1,813 1,708 (1) Eligible as Tier 1 regulatory capital.
Undated subordinated debt of the 2,212,761 notes initially issued were retired between 2004 and Fortis Bank NV/SA made two issues of undated subordinated debt in 2008, 2007 and subsequently cancelled. Payment of interest is obligatory, but one for USD 750 million at 8.28%, the other for EUR 375 million at 8.03%. the Board of Directors may postpone interest payments if the Ordinary They may be redeemed by BNP Paribas Fortis as of 2013. They are eligible General Meeting of Shareholders Meeting held to approve the fi nancial as Tier 1 regulatory capital. statements notes that there is no income available for distribution. In December 2009, BNP Paribas made a public offer for these securities Undated participating subordinated notes comprising an exchange offer for Undated Super Subordinated Notes Undated participating subordinated notes issued by BNP SA between 1984 (see note 8.a) and a cash offer. The transaction generated a gross gain and 1988 for a total amount of EUR 337 million are redeemable only in of EUR 7 million over the book value of the undated participating notes the event of liquidation of BNP Paribas SA, but may be retired on the tendered to the offer. terms specifi ed in the law of 3 January 1983. Under this option, 434,267
184 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
5.i HELD-TO-MATURITY FINANCIAL ASSETS In millions of euros 31 December 2010 31 December 2009 Negotiable certifi cates of deposit 2,952 3,103 Treasury bills and other bills eligible for central bank refi nancing 2,892 3,044 Other negotiable certifi cates of deposit 60 59 Bonds 10,821 10,920 Government bonds 10,664 10,692 Other bonds 157 228 TOTAL HELD-TO-MATURITY FINANCIAL ASSETS 13,773 14,023
5.j CURRENT AND DEFERRED TAXES In millions of euros 31 December 2010 31 December 2009 Current taxes 2,315 2,067 Deferred taxes 9,242 10,050 Current and deferred tax assets 11,557 12,117 Current taxes 2,104 2,669 4 Deferred taxes 1,641 2,093 Current and deferred tax liabilities 3,745 4,762
➤ Change in deferred taxes over the period:
In millions of euros Year to 31 Dec. 2010 Year to 31 Dec. 2009 NET DEFERRED TAXES AT START OF PERIOD 7,957 2,214 Profi t (loss) of deferred taxes (note 2.g) (1,572) (199) Impact of the fi rst consolidation of Fortis - 6,176 Change in deferred taxes linked to the remeasurement and reversal through profi t or loss of remeasurement adjustments on available-for-sale fi nancial assets 1,018 (982) Change in deferred taxes linked to the remeasurement and reversal through profi t or loss of remeasurement adjustments on hedging derivatives 16 79 Effect of exchange rate and other movements 182 669 NET DEFERRED TAXES AT END OF PERIOD 7,601 7,957
➤ Breakdown of deferred taxes by origin:
In millions of euros 31 December 2010 31 December 2009 Available-for-sale fi nancial assets 827 (577) Unrealised fi nance lease reserve (715) (666) Provisions for employee benefi t obligations 884 940 Provision for credit risk 3,829 3,939 Other items (116) 984 Tax loss carryforwards 2,892 3,337 NET DEFERRED TAXES 7,601 7,957 of which Deferred tax assets 9,242 10,050 Deferred tax liabilities (1,641) (2,093) With a view to determining the size of the tax loss carryforwards future revenue and charges in line with their business plan. Tax loss capitalised as assets, the Group conducts every year a specifi c review carryforwards not capitalised as assets at the end of the year totalled for each relevant entity based on the applicable tax regime–notably EUR 2,241 million at 31 December 2010 compared with EUR 1,785 million incorporating any peremption rules–and a realistic projection of their at 31 December 2009.
2010 Registration document and fi nancial report - BNP PARIBAS 185 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
5.k ACCRUED INCOME/EXPENSE AND OTHER ASSETS/LIABILITIES In millions of euros 31 December 2010 31 December 2009 Guarantee deposits and bank guarantees paid 32,711 25,506 Settlement accounts related to securities transactions 21,889 46,843 Collection accounts 2,486 3,092 Reinsurers’ share of technical reserves 2,495 2,403 Accrued income and prepaid expenses 3,405 3,297 Other debtors and miscellaneous assets 20,138 22,220 TOTAL ACCRUED INCOME AND OTHER ASSETS 83,124 103,361 Guarantee deposits received 25,777 22,698 Settlement accounts related to securities transactions 19,515 29,424 Collection accounts 566 1,217 Accrued expenses and deferred income 5,630 6,157 Other creditors and miscellaneous liabilities 13,741 12,929 TOTAL ACCRUED EXPENSES AND OTHER LIABILITIES 65,229 72,425
4 The movement in “Reinsurers’ share of technical reserves” breaks down as follows: In millions of euros 31 December 2010 31 December 2009 REINSURERS’ SHARE OF TECHNICAL RESERVES AT START OF PERIOD 2,403 2,226 Increase in technical reserves borne by reinsurers 1,151 824 Amounts received in respect of claims and benefi ts passed on to reinsurers (1,073) (652) Effect of changes in exchange rates and scope of consolidation 14 5 REINSURERS’ SHARE OF TECHNICAL RESERVES AT END OF PERIOD 2,495 2,403
5.l INVESTMENTS IN ASSOCIATES In millions of euros 31 December 2010 31 December 2009 Retail Banking 1,058 862 of which Bank of Nanjing 295 175 of which Carrefour Promotora Vendas Participacoes 125 134 of which Servicios Financieros Carrefour EFC SA 102 97 of which Societe Paiement Pass 240 195 Investment Solutions 1,956 2,024 of which AG Insurance 1,046 1,135 of which B.N.L Vita 232 243 Corporate and Investments Banking 152 192 Other businesses 1,632 1,683 of which Erbe 1,219 1,256 of which Verner Investissement 361 361 INVESTMENTS IN ASSOCIATES 4,798 4,761
Companies accounted for under the equity method with a carrying amount of over EUR 100 million at 31 December 2010 are listed individually above.
186 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
The following table gives fi nancial data for the Group’s main associates: Financial Net income reporting attributable to In millions of euros standard Total assets Net revenue equity holders AG Insurance (2) IFRS Gaap 54,795 6,827 559 Bank of Nanjing (2) Local Gaap 16,977 412 147 BNL Vita (2) IFRS Gaap 11,705 3,050 133 Carrefour Promotora Vendas Participacoes (2) IFRS Gaap 257 22 39 Erbe (1) IFRS Gaap 2,516 109 Servicios Financieros Carrefour EFC SA (2) Local Gaap 1,289 191 22 Societe de Paiement Pass (2) Local Gaap 3,279 314 70 Verner Investissement IFRS Gaap 6,361 409 67 (1) Data at 30 September 2010. (2) Data for full-year 2009 or at 31 December 2009.
5.m PROPERTY, PLANT, EQUIPMENT AND INTANGIBLE ASSETS USED IN OPERATIONS, INVESTMENT PROPERTY 4 31 December 2010 31 December 2009 Accumulated Accumulated depreciation, depreciation, amortisation and Carrying amortisation and Carrying In millions of euros Gross value impairment amount Gross value impairment amount INVESTMENT PROPERTY 14,411 (2,084) 12,327 13,536 (1,664) 11,872 Land and buildings 6,504 (1,286) 5,218 6,719 (1,131) 5,588 Equipment, furniture and fi xtures 6,550 (3,999) 2,551 6,157 (3,756) 2,401 Plant and equipment leased as lessor under operating leases 11,927 (4,127) 7,800 11,252 (3,998) 7,254 Other property, plant and equipment 2,279 (723) 1,556 2,426 (613) 1,813 PROPERTY, PLANT AND EQUIPMENT 27,260 (10,135) 17,125 26,554 (9,498) 17,056 Purchased software 2,297 (1,705) 592 2,116 (1,538) 578 Internally-developed software 2,392 (1,679) 713 2,172 (1,501) 671 Other intangible assets 1,989 (796) 1,193 1,821 (871) 950 INTANGIBLE ASSETS 6,678 (4,180) 2,498 6,109 (3,910) 2,199
Investment property The estimated fair value of investment property accounted for at cost at 31 December 2010 was EUR 18,138 million, compared with Land and buildings leased by the Group as lessor under operating EUR 17,137 million at 31 December 2009. leases, and land and buildings held as investments in connection with life insurance business, are recorded at amortised cost in “Investment property”.
2010 Registration document and fi nancial report - BNP PARIBAS 187 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Operating leases and investment property transactions are in certain cases subject to agreements providing for the following minimum future payments:
In millions of euros 31 December 2010 31 December 2009 Future minimum lease payments receivable under non-cancellable leases 6,205 6,202 Payments receivable within 1 year 2,208 2,514 Payments receivable after 1 year but within 5 years 3,258 3,142 Payments receivable beyond 5 years 739 546
Future minimum lease payments receivable under non-cancellable leases Depreciation, amortisation and impairment comprise payments that the lessee is required to make during the lease term. Net depreciation and amortisation expense for the year ended 31 December 2010 was EUR 1,613 million, compared with EUR 1,372 million for the year ended 31 December 2009. Intangible assets The net decrease in impairment losses on property, plant, equipment Other intangible assets comprise leasehold rights, goodwill and and intangible assets taken to the profi t and loss account in the year trademarks acquired by the Group. ended 31 December 2010 amounted to EUR 20 million, compared with a net increase of EUR 10 million for the year ended 31 December 2009.
5.n GOODWILL 4 In millions of euros Year to 31 Dec. 2010 Year to 31 Dec. 2009 CARRYING AMOUNT AT START OF PERIOD 10,979 10,918 Acquisitions 25 612 Divestments (40) (3) Impairment losses recognised during the period (78) (582) Translation adjustments 388 47 Other movements 50 (13) CARRYING AMOUNT AT END OF PERIOD 11,324 10,979 In which Gross value 11,901 11,574 Accumulated impairment recognised at the end of period (577) (595)
188 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Goodwill by core business is as follows: Carrying amount Impairment losses recognised Acquisitions of the period Year to Year to Year to Year to In millions of euros 31 December 2010 31 December 2009 31 Dec. 2010 31 Dec. 2009 31 Dec. 2010 31 Dec. 2009 Goodwill Retail Banking 8,623 8,315 (2) (582) 11 449 BancWest 3,733 3,482 - - 3 - Equipment Solution 682 661 - (105) 1 3 French Retail Banking 68 68 ---- Italian Retail Banking 1,698 1,698 ---- Méditerranean Europe 142 136 (2) (220) 7 Personal Finance 2,300 2,270 - (257) - 446 Investment Solutions 1,813 1,833 (76) - 10 158 Insurance 138 144 - - 3 1 Investment Partners 229 274 (76) - - 23 Personal Investors 417 418 - - - 18 Real Estate 342 339 - - - 8 4 Securities Services 362 341 - - 7 - Wealth Management 325 317 - - - 108 Corporate and Investment Banking 645 624 --45 Other businesses 243 207 - - - - TOTAL GOODWILL 11,324 10,979 (78) (582) 25 612 Negative goodwill on Fortis acquisition 835 CHANGE IN VALUE OF GOODWILL (78) 253
Goodwill impairment tests are based on three different methods: The tests take into account the cost of capital based on a risk-free rate transaction multiples for comparable businesses, share price data for plus a business specifi c risk premium. The key parameters which are listed companies with comparable businesses, and discounted future sensitive to the assumptions made are therefore the cost/income ratio, cash fl ows (DCF). the sustainable growth rate and the cost of capital. If one of the two comparables based methods indicates the need for an The valuation produced did not bring to light any requirement for impairment, the DCF method is used to validate the results and determine impairment in any of the Cash-Generating Units. Sensitivity to changes the amount of impairment required. in the various parameters shown above was also measured: these measurements did not reveal any vulnerability in the valuations. The DCF method is based on a number of assumptions in terms of future revenues, expenses and risk provisions for each business unit. These parameters are taken from the medium-term business plan for the fi rst three years, extrapolated over a sustainable growth period of ten years and then in perpetuity, based on sustainable growth rates up to ten years and the infl ation rate thereafter.
2010 Registration document and fi nancial report - BNP PARIBAS 189 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
5.o TECHNICAL RESERVES OF INSURANCE COMPANIES In millions of euros 31 December 2010 31 December 2009 Liabilities related to insurance contracts 103,056 89,986 Gross technical reserves Unit-linked contracts 33,058 29,357 Other insurance contracts 69,998 60,629 Liabilities related to fi nancial contracts with discretionary participation feature 10,029 9,513 Policyholders’ surplus 1,833 2,056 TOTAL TECHNICAL RESERVES OF INSURANCE COMPANIES 114,918 101,555 Liabilities related to unit-linked fi nancial contracts (1) 1,437 2,257 Liabilities related to general fund fi nancial contracts 54 179 TOTAL LIABILITIES RELATED TO CONTRACTS WRITTEN BY INSURANCE COMPANIES 116,409 103,991 (1) Liabilities related to unit-linked fi nancial contracts are included in “Due to customers” (note 5.g).
The policyholders’ surplus reserve arises from the application of shadow on those assets. This interest, set at 90% for France (identical to 2009), accounting. It represents the interest of policyholders, mainly within is an average derived from stochastic analyses of unrealised gains and 4 French life insurance subsidiaries, in unrealised gains and losses on losses attributable to policyholders in various scenarios. assets where the benefi t paid under the policy is linked to the return
The movement in liabilities related to insurance contracts breaks down as follows:
In millions of euros Year to 31 Dec. 2010 Year to 31 Dec. 2009 LIABILITIES RELATED TO CONTRACTS AT START OF PERIOD 103,991 89,503 Additions to insurance contract technical reserves and deposits taken on fi nancial contracts related to life insurance 16,389 18,067 Claims and benefi ts paid (9,799) (7,502) Contracts portfolio disposals (608) (487) Effect of changes in scope of consolidation 4,449 319 Effect of movements in exchange rates 575 227 Effect of changes in value of admissible investments related to unit-linked business 1,412 3,864 LIABILITIES RELATED TO CONTRACTS AT END OF PERIOD 116,409 103,991
See note 5.k for details of reinsurers’ share of technical reserves.
5.p PROVISIONS FOR CONTINGENCIES AND CHARGES In millions of euros Year to 31 Dec. 2010 Year to 31 Dec. 2009 TOTAL PROVISIONS AT START OF PERIOD 10,464 4,388 Additions to provisions 1,527 1,491 Reversals of provisions (964) (611) Provisions used (1,050) (1,001) Impact of the fi rst consolidation of Fortis - 6,183 Effect of movements in exchange rates and other movements 334 14 TOTAL PROVISIONS AT END OF PERIOD 10,311 10,464
At 31 December 2010 and 31 December 2009, provisions for contingencies regulated savings products and for litigation in connection with banking and charges mainly included provisions for post-employment benefi ts transactions. (note 7.b), for impairment related to credit risks (note 2.f), for risks on
190 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
➤ PROVISIONS FOR REGULATED SAVINGS PRODUCT RISKS
➤ Deposits, loans and savings
In millions of euros 31 December 2010 31 December 2009 Deposits collected under home savings accounts and plans 14,172 14,086 of which deposits collected under home savings plans 11,401 11,252 Aged more than 10 years 3,764 3,424 Aged between 4 and 10 years 5,752 5,254 Aged less than 4 years 1,885 2,574 Outstanding loans granted under home savings accounts and plans 515 589 of which loans granted under home savings plans 126 160 Provisions recognised for home savings accounts and plans 226 202 of which home savings plans 203 166 Aged more than 10 years 67 61 Aged between 4 and 10 years 102 60 Aged less than 4 years 34 45 4 ➤ Change in provisions Year to 31 Dec. 2010 Year to 31 Dec. 2009 Provisions recognised - Provisions recognised - Provisions recognised - Provisions recognised - In millions of euros home savings plans home savings accounts home savings plans home savings accounts TOTAL PROVISIONS AT START OF PERIOD 166 36 91 37 Additions to provisions during the period 37 - 75 8 Provision reversals during the period - (13) - (9) TOTAL PROVISIONS AT END OF PERIOD 203 23 166 36
2010 Registration document and fi nancial report - BNP PARIBAS 191 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Note 6 FINANCING COMMITMENTS AND GUARANTEE COMMITMENTS
6.a FINANCING COMMITMENTS GIVEN OR RECEIVED Contractual value of fi nancing commitments given and received by the Group:
In millions of euros 31 December 2010 31 December 2009 Financing commitments given
■ to credit institutions 45,413 34,882
■ to customers 269,318 238,882 Confi rmed letters of credit 225,647 211,563 Other commitments given to customers 43,671 27,319 TOTAL FINANCING COMMITMENTS GIVEN 314,731 273,764 Financing commitments received
■ from credit institutions 104,768 79,471
■ from customers 24,728 6,584 TOTAL FINANCING COMMITMENTS RECEIVED 129,496 86,055 4
6.b GUARANTEE COMMITMENTS GIVEN BY SIGNATURE In millions of euros 31 December 2010 31 December 2009 Guarantee commitments given
■ to credit institutions 10,573 10,367
■ to customers 91,990 94,283 Property guarantees 1,502 1,313 Sureties provided to tax and other authorities, other sureties 50,241 59,808 Other guarantees 40,247 33,162 TOTAL GUARANTEE COMMITMENTS GIVEN 102,563 104,650
6.c OTHER GUARANTEE COMMITMENTS ➤ FINANCIAL INSTRUMENTS GIVEN AS COLLATERAL
In millions of euros 31 December 2010 31 December 2009 Financial instruments (negotiable securities and private receivables) lodged with central banks and eligible for use at any time as collateral for refi nancing transactions 94,244 130,240
■ Used as collateral with central banks 15,623 44,454
■ Available for refi nancing transactions 78,621 85,786 Securities sold under repurchase agreements 275,245 340,669 Other fi nancial assets pledged as collateral for transactions with banks and financial customers (1) 64,199 73,776 (1) Notably including “Société de Financement de l’Économie Française“ and “Caisse de Refi nancement de l’Habitat“ fi nancing.
Financial instruments given as collateral by the Group that the benefi ciary is authorised to sell or reuse as collateral amounted to EUR 327,482 million at 31 December 2010 (EUR 366,771 million at 31 December 2009).
192 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
➤ FINANCIAL INSTRUMENTS RECEIVED AS COLLATERAL
In millions of euros 31 December 2010 31 December 2009 Financial instruments received as collateral (excluding repurchase agreements) 73,623 53,863 of which instruments that the Group is authorised to sell and reuse as collateral 41,440 44,062 Securities received under repurchase agreements 250,607 276,730
The fi nancial instruments received as collateral or under repurchase agreements that the Group effectively sold or reused as collateral amounted to EUR 210,356 million at 31 December 2010 (compared with EUR 235,750 million at 31 December 2009).
Note 7 SALARIES AND EMPLOYEE BENEFITS
7.a SALARY AND EMPLOYEE BENEFIT EXPENSES In millions of euros Year to 31 Dec. 2010 Year to 31 Dec. 2009 Fixed and variable remuneration, incentive bonuses and profi t-sharing 11,406 9,795 Retirement bonuses, pension costs and social security taxes 3,234 3,529 4 Payroll taxes 470 674 TOTAL SALARY AND EMPLOYEE BENEFIT EXPENSES 15,110 13,998
7.b POST-EMPLOYMENT BENEFITS annuity on retirement in addition to the pension paid by nationwide schemes. IAS 19 distinguishes between two categories of plans, each handled differently depending on the risk incurred by the entity. When the entity In addition, since defined-benefit plans have been closed to new is committed to paying a fi xed amount, stated as a percentage of the employees in most countries outside France, they are offered the benefi t benefi ciary’s annual salary, for example, to an external entity handling of joining defi ned-contribution pension plans. payment of the benefi ts based on the assets available for each plan The amount paid into defined-contribution post-employment plans member, it is described as a defi ned-contribution plan. Conversely, when in France and other countries for the year to 31 December 2010 the entity’s obligation is to manage the fi nancial assets funded through was EUR 482 million, compared with EUR 422 million for the year to the collection of contributions from employees and to bear the cost of 31 December 2009. benefi ts itself–or to guarantee the fi nal amount subject to future events, it is described as a defi ned-benefi t plan. The same applies, if the entity Defined-benefit pension plans for Group entities entrusts management of the collection of premiums and payment of In France, BNP Paribas pays a top-up banking industry pension arising benefi ts to a separate entity, but retains the risk arising from management from rights acquired to 31 December 1993 by retired employees at that of the assets and from future changes in the benefi ts. date and active employees in service at that date. The residual pension obligations are covered by a provision in the consolidated fi nancial Pension plans and other post-employment statements or are transferred to an insurance company outside the benefits Group. The defi ned-benefi t plans previously granted to Group executives formerly employed by BNP, Paribas or Compagnie Bancaire have all been The BNP Paribas Group has implemented over the past few years a wide closed and converted into top-up type schemes. The amounts allocated to compaign of converting defi ned-benefi t plans into defi ned-contribution the benefi ciaries, subject to their presence within the Group at retirement, plans. were fi xed when the previous schemes were closed. These pension plans In France, for example, the BNP Paribas Group pays contributions to have been funded through insurance companies. The fair value of the various nationwide basic and top-up pension schemes. BNP Paribas SA related plan assets in these companies’ balance sheets breaks down as and certain subsidiaries have set up a funded pension plan under a 82.4% bonds, 8.5% equities and 9.1% property assets. company-wide agreement. Under this plan, employees will receive an
2010 Registration document and fi nancial report - BNP PARIBAS 193 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
In Belgium, BNP Paribas Fortis provides a defi ned-benefi t plan for its On 31 December 2010, Belgium, the United Kingdom, the United States, employees and middle managers who joined the bank before its pension Switzerland and Turkey represent 92% of the total gross defi ned-benefi t plans were harmonised on 1 January 2002, based on fi nal salary and obligations outside France. The fair value of the related plan assets was the number of years’ service. The obligation is partially funded through split as follows: 57% bonds, 15% equities, 28% other fi nancial instruments AG Insurance, in which the BNP Paribas Group owns an 18.73% interest. (including 11% in insurance contracts). BNP Paribas Fortis’ senior managers have a pension plan that provides a lump sum based on number of years’ service and fi nal salary, which is Other post-employment benefits partially funded through AXA Belgium and AG Insurance. Group employees also receive various other contractual post-employment benefits, such as indemnities payable on retirement. BNP Paribas’ Under Belgian and Swiss law, the employer is responsible for a obligations for these benefi ts in France are funded through a contract guaranteed minimum return on defi ned-contribution plans. As a result held with a third-party insurer. In other countries, the Group obligations of this obligation, these plans are classifi ed as defi ned-benefi t plans. are mainly concentrated in Italy (77%), where pension reforms changed Defi ned-benefi t pension plans remain in place in certain countries, but Italian termination indemnity schemes (TFR) into defi ned-contribution are generally closed to new members. They are based either on the plans effective from 1 January 2007. Rights vested up to 31 December 2006 vesting of a pension linked to the employee’s fi nal salary and length of continue to be qualifi ed as defi ned-benefi t obligations. service (United Kingdom) or on the annual vesting of rights to a lump sum expressed as a percentage of annual salary and paying interest at a Post-employment healthcare plans pre-defi ned rate (United States). Some plans are top-up schemes linked In France, BNP Paribas no longer has any obligations in relation to to statutory pensions (Norway). Some plans are managed by an insurance healthcare benefi ts for its retired employees. Several healthcare benefi t company (Netherlands), a foundation (Switzerland) or by independent plans for retired employees exist in other countries, mainly in the United funds (United Kingdom). States and Belgium. 4 In Turkey, the pension plan replaces the national pension scheme and is fully funded by fi nancial assets held with an external foundation.
Obligations under defined-benefit plans ➤ ASSETS AND LIABILITIES RECOGNISED ON THE BALANCE SHEET
Post-employment benefi ts Post-employment healthcare benefi ts In millions of euros 31 December 2010 31 December 2009 31 December 2010 31 December 2009 Present Value of Defi ned Benefi t Obligation 8,052 8,009 114 99 Defi ned benefi t obligation arising from wholly or partially funded plans 7,328 7,166 - - Defi ned Benefi t Obligation arising from wholly unfunded plans 724 843 114 99 Fair value of plan assets (3,889) (3,474) - - Fair value of reimbursement rights (1) (2,366) (2,566) - - Cost not yet recognised in accordance with IAS 19 (219) (325) (1) 6 Prior Service Costs (178) (185) (3) 3 Net actuarial Gains/(Losses) (41) (140) 2 3 Effect of asset ceiling 209 162 - - NET OBLIGATION RECOGNISED IN THE BALANCE SHEET FOR DEFINED-BENEFIT PLANS 1,787 1,806 113 105 Asset recognised in the balance sheet for defi ned-benefi t plans (2,473) (2,636) - - of which net assets of defi ned-benefi t plans (107) (70) - - of which fair value of reimbursement rights (2,366) (2,566) - - Obligation recognised in the balance sheet for defi ned- benefi t plans 4,260 4,442 113 105 (1) The reimbursement rights are principally found on the balance sheet of the Group’s insurance subsidiaries – notably AG Insurance with respect to BNP Paribas Fortis’ defi ned-benefi t plan – to hedge its commitments to other Group entities that were transferred to them to cover the post-employment benefi ts of certain employee categories.
194 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
➤ CHANGE IN THE PRESENT VALUE OF THE DEFINED BENEFIT OBLIGATION
Post-employment benefi ts Post-employment healthcare benefi ts Year Year Year Year In millions of euros to 31 Dec. 2010 to 31 Dec. 2009 to 31 Dec. 2010 to 31 Dec. 2009 PRESENT VALUE OF DEFINED BENEFIT OBLIGATION AT START OF PERIOD 8,009 4,113 99 48 Current Service Cost 308 280 2 2 Interest Cost 335 289 5 4 Plan amendments 5 1 2 1 Curtailments or settlements (319) (53) - - Actuarial (Gains)/Losses on obligation (95) (206) 6 (4) Actual Employee Contributions 30 23 - - Benefi ts paid directly by employer (120) (392) (4) (4) Benefi ts paid from assets/reimbursement rights (327) (205) - - Exchange rate (Gains)/Losses on obligation 212 47 3 - Consolidation variation (Gains)/Losses on obligation 16 4,088 - 52 Others (2) 24 1 - 4 PRESENT VALUE OF DEFINED BENEFIT OBLIGATION AT END OF PERIOD 8,052 8,009 114 99
➤ CHANGE IN THE FAIR VALUE OF PLAN ASSETS
Post-employment benefi ts In millions of euros Year to 31 Dec. 2010 Year to 31 Dec. 2009 FAIR VALUE OF PLAN ASSETS AT START OF PERIOD 3,474 2,129 Expected return on plan assets 197 151 Settlements (6) (40) Actuarial Gains/(Losses) on plan assets 61 108 Actual Employee contributions 22 18 Employer contributions 123 527 Benefi ts paid from plan assets (171) (205) Exchange rate Gains/(Losses) on plan assets 185 30 Consolidation variation Gains/(Losses) on plan assets 4 756 FAIR VALUE OF PLAN ASSETS AT END OF PERIOD 3,889 3,474
Healthcare benefi t plans are not funded plans.
2010 Registration document and fi nancial report - BNP PARIBAS 195 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
➤ CHANGE IN THE FAIR VALUE OF REIMBURSEMENT RIGHTS
Post-employment benefi ts In millions of euros Year to 31 Dec. 2010 Year to 31 Dec. 2009 FAIR VALUE OF REIMBURSEMENT RIGHTS AT START OF PERIOD 2,566 15 Expected return on reimbursement rights 96 72 Settlements (199) - Actuarial Gains/(Losses) on reimbursement rights (58) 93 Actual Employee contributions 85 Employer contributions 108 88 Benefi ts paid from reimbursement rights (156) (258) Consolidation variation Gains/(Losses) on reimbursement rights - 2,550 Others 11 FAIR VALUE OF REIMBURSEMENT RIGHTS AT END OF PERIOD 2,366 2,566
Healthcare benefi t plans are not funded plans.
4 ➤ COMPONENTS OF THE COST OF DEFINED-BENEFIT PLANS
Post-employment benefi ts Post-employment healthcare benefi ts In millions of euros Year to 31 Dec. 2010 Year to 31 Dec. 2009 Year to 31 Dec. 2010 Year to 31 Dec. 2009 Current Service Cost 308 280 2 2 Interest Cost 335 289 5 4 Expected return on plan assets (197) (152) - - Expected return on reimbursement rights (96) (72) - - Amortization of actuarial (Gains)/Losses 4 28 - - Amortization of Prior Service Costs 13 10 1 - (Gains)/Losses on curtailments or settlements (104) (13) - - Effect of asset ceiling 41 15 - - Others (2) - - - TOTAL EXPENSE RECORDED IN "SALARY AND EMPLOYEE BENEFIT EXPENSES" 302 386 8 6
Method used to measure obligations ➤ PRINCIPAL ACTUARIAL ASSUMPTIONS USED Defi ned-benefi t plans are valued by independent fi rms using actuarial TO CALCULATE POST-EMPLOYMENT BENEFIT OBLIGATIONS (EXCLUDING POST-EMPLOYMENT techniques, applying the projected unit credit method, in order to HEALTHCARE BENEFITS) determine the expense arising from rights vested by employees and benefi ts payable to retired employees. The demographic and fi nancial The Group discounts its obligations at the government bond yield in the assumptions used to estimate the present value of these obligations and eurozone and the yield on high quality corporate bonds in other currency of plan assets take into account economic conditions specifi c to each areas, the term of the corporate or government bonds being consistent country and Group company. with the duration of the estimated obligations. When the market for Obligations under post-employment healthcare benefit plans are such bonds is not suffi ciently deep, the obligation is discounted at the measured using the specific mortality tables applicable in each government bond yield. country and healthcare cost trend assumptions. These assumptions, which are derived from historical data, take into account expectations about healthcare benefi t costs, including expected trend in the cost of healthcare benefi ts and expected infl ation.
196 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
The rates used are as follows: 31 December 2010 31 December 2009 Euro zone Euro zone In % France excl. France UK USA France excl. France UK USA Discount rate 3.26%-4.40% 3.15%-4.50% 4.70% 5.25% 3.06%-4.25% 3.06%-4.50% 4.5%-4.95% 5.75% Rate of compensation increase (*) 3.00%-4.50% 1.80%-5.80% 2.00%-5.20% 4.00% 3.00%-4.50% 2.00%-4.00% 3.50%-5.15% 4.00% (*) Including price increases (infl ation).
➤ ACTUAL RATE OF RETURN ON PLAN ASSETS AND REIMBURSEMENT RIGHTS OVER THE PERIOD
The expected return on plan assets is determined by weighting the expected return on each asset class by its respective contribution to the fair value of total plan assets. Year to 31 Dec. 2010 Year to 31 Dec. 2009 Euro zone Euro zone In % France excl. France UK USA France excl. France UK USA Expected return on plan assets and reimbursement rights (1) 3.90% 3.25%-4.70% 4.40%-6.80% 5.00%-6.00% 4.00% 3.25%-5.75% 4.85%-6.40% 5.00%-6.00% Actual return on plan assets 4 and reimbursement rights (1) 3.89% 3.00%-13.00% 3.30%-13.60% 9.70%-11.30% 3.95% (4.00)%-22.00% 10.00%-21.00% 14.00%-30.00% (1) Range of values, refl ecting the existence of several plans within a single country or geographical or monetary zone.
➤ ACTUARIAL GAINS AND LOSSES BNP Paribas applies the “corridor” approach permitted in IAS 19, which specifi es that recognition of actuarial gains and losses is deferred when Actuarial gains and losses reflect increases or decreases in the they do not exceed 10% of the greater of the i) obligation and ii) value present value of a defi ned-benefi t obligation or in the fair value of the of the plan assets. The “corridor” is calculated separately for each corresponding plan assets. Actuarial gains and losses resulting from defi ned-benefi t plan. Where this limit is breached, the exceeding portion the change in the present value of a defi ned-benefi t plan obligation are of cumulative actuarial gains and losses is amortised in the profi t and the cumulative effect of experience adjustments (differences between loss account over the remaining working lives of employees participating previous actuarial assumptions and actual occurrences) and the effects to the plan. of changing actuarial assumptions.
The following table shows the actuarial gains and losses: Post-employment benefi ts In millions of euros 31 December 2010 31 December 2009 CUMULATIVE UNRECOGNISED ACTUARIAL LOSSES (41) (140) NET ACTUARIAL GAINS GENERATED OVER THE PERIOD 98 407 of which Actuarial Gains on plan assets or reimbursement rights 3 of which Actuarial Gains from changes in actuarial assumptions on obligation 137 of which Experience Losses on obligation (42)
2010 Registration document and fi nancial report - BNP PARIBAS 197 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
7.c OTHER LONG-TERM BENEFITS As part of the Group’s variable compensation policy, annual deferred compensation plans are set up for certain high-performing employees BNP Paribas offers its employees various long-term benefi ts, mainly or pursuant to special regulatory frameworks. long-service awards, the ability to save up paid annual leave in time savings accounts, and certain guarantees protecting them in the event Under these plans, payment is deferred over time and is subject to the they become incapacitated. performance achieved by the business lines, divisions and Group.
In millions of euros 31 December 2010 31 December 2009 Net provisions for other long-term benefi ts 821 622
7.d TERMINATION BENEFITS Such plans chiefl y exist in Italy and Belgium. In France, all the voluntary early retirement plans are currently closed; the residual obligation BNP Paribas has implemented a number of voluntary redundancy plans related to these plans is not material. for employees who meet certain eligibility criteria. The obligations to eligible active employees under such plans are provided for where the plan is the subject of a bilateral agreement or a draft bilateral agreement.
In millions of euros 31 December 2010 31 December 2009 4 Provisions for voluntary departure and early retirement plans 389 232 7.e SHARE-BASED PAYMENTS the performance of the BNP Paribas share relative to the Dow Jones Euro Stoxx Bank index. This relative performance is measured at the end of Share-based loyalty, compensation and the fi rst, second, third and fourth years of the compulsory holding period incentive schemes and, at each measurement date, applies to one quarter of the options subject to the performance condition. BNP Paribas has set up share-based payment systems for certain The conditional portion granted in 2010 differs according to employee employees, including stock option and share award plans put in place in category and is set at 100% of the total award for members of the connection with deferred compensation plans and a Global Share-Based BNP Paribas Group Executive Committee and senior managers and 20% Incentive Plan. In addition, some cash-settled long-term compensation for other benefi ciaries (respectively 60%, 40% and 20% in 2009). plans are linked to the share price. The performance of the BNP Paribas share relative to the index is Global Share-Based Incentive Plan determined by comparing the percentage ratio between the average Until 2005, various stock option plans were granted to Group employees opening price of the BNP Paribas share in each compulsory holding year by BNP Paribas and BNL, under successive authorisations given by and its average opening price in the previous year, with the percentage Extraordinary Shareholders’ Meetings. ratio between the average of the opening prices of the index in the same Since 2005, the Group has set up stock option plans on an annual basis periods. with a view to actively involving various categories of managers in If the BNP Paribas share outperforms the index, the exercise price creating value for the Group, and thereby encouraging the convergence of the corresponding portion of the options remains unchanged. If it of their interests with those of the Group’s shareholders. The managers underperforms the index by 20 points or more, the options subject to selected for these plans represent the Group’s best talent, including the the performance condition will lapse and may no longer be exercised. next generation of leaders: senior managers, managers in key positions, If the BNP Paribas share underperforms the index by less than 5 points, line managers and technical experts, high-potential managers, high- by 5 to less than 10 points, or by 10 to less than 20 points, the initial performing young managers with good career development prospects, exercise price of the relevant portion of the options will be increased by and major contributors to the Group’s results. 5%, 10% or 20% respectively. The option exercise price under these plans is determined at the time Under stock option plans set up since 2003, the performance condition of issuance in accordance with the terms of the authorisation given by was not fully met on six of seventeen occasions and the adjustments the corresponding Extraordinary Shareholders’ Meeting. No discount is described above were therefore implemented. offered. Since the 2005 plan, the life of the options granted has been reduced to 8 years. In 2006, BNP Paribas used the authorisations granted by the Extraordinary Shareholders’ Meeting of 18 May 2005 to set up a Global Share-Based The plans are subject to vesting conditions under which a portion of the Incentive Plan for the above-mentioned employee categories, which options granted over and above a minimum threshold is conditional upon consists of stock options and share awards.
198 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Employees’ rights under share awards made in 2010 vest after a period Variable compensation, with respect to 2009 and 2010, of 3 or 4 years, depending on the case and provided the employee is still for employees, subject to special regulatory frameworks a member of the Group. The compulsory holding period for the shares In 2009, the relevant Group employees were primarily trading staff. The granted free of consideration is two years for French employees. Up until variable compensation plan was established in accordance with the rules 2009, the vesting period was either two years or four years, depending on set out in the Decree of 3 November 2009 on compensation for employees the exact circumstances. Share awards were made to Group employees whose activities are likely to have an impact on the risk exposure of credit outside France from 2009 onwards. Since 2009, a performance condition institutions and investment fi rms, and with the industry guidelines for has been introduced for share awards. variable compensation paid to trading staff issued on 5 November 2009. The conditional portion differs according to the employee category and The 2010 variable compensation plan applies to Group employees was set at 100% of the total award for members of the BNP Paribas performing activities that may have a material impact on the Group’s Group Executive Committee and senior managers and 20% for other risk profi le and takes into account the regulatory changes that occurred benefi ciaries. upon publication of the Decree by the French ministry of fi nance on This performance condition can be met either on an annual basis, if the 13 December 2010. Group’s earnings per share increase by 5% or more compared with the Under these plans, payment is deferred over time and is contingent on previous year, or on an aggregate basis over the fi rst three years of the the performance achieved by the business lines, divisions and Group. vesting period. Sums are paid mostly in cash and are linked to the negative or positive If this condition is not met, the relevant portion of the share awards change in the BNP Paribas share price. In addition, in accordance with will lapse. the Decree of 13 December 2010, some of the variable compensation All unexpired plans settle in subscription or purchase of BNP Paribas awarded in 2011 in respect of 2010 performance will also be indexed shares. to the BNP Paribas share price and paid to benefi ciaries during 2011. 4 Deferred share price-linked, cash-settled Deferred variable compensation for other Group employees compensation plans Sums due under the annual deferred compensation plans for high- As part of the Group’s variable remuneration policy, deferred annual performing employees are paid all or part in cash and are linked to the compensation plans offered to certain high-performing employees or set negative or positive change in the BNP Paribas share price. up pursuant to special regulatory frameworks may entitle benefi ciaries to variable compensation settled in cash but linked to the share price, payable over several years.
Expense of share-based payment 2010 2009 Variable deferred Stock option Share award compensation Expense in millions of euros plans plans plans Total expense Total expense Prior deferred compensation plans - - 9 9 435 Deferred compensation plan for the year - - 566 566 710 Global Share-Based Incentive Plan 46 25 - 71 88 TOTAL 46 25 575 646 1,233
Valuation of stock options and share awards Measurement of stock subscription options As required under IFRS 2, BNP Paribas attributes a value to stock options Binomial or trinomial tree algorithms are used to build in the possibility and share awards granted to employees and recognises an expense, of non-optimal exercise of options from the vesting date. The Monte Carlo determined at the date of grant, calculated respectively on the basis of method is also used to price in the characteristics of certain secondary the fair value of the options and shares concerned. This initial fair value grants linking options to the performance of the BNP Paribas share may not subsequently be adjusted for changes in the quoted market price relative to a sector index. of BNP Paribas shares. The only assumptions that may result in a revision The implied volatility used in measuring stock option plans is estimated to fair value during the vesting period, and hence an adjustment in the on the basis of a range of ratings prepared by various dealing rooms. The expense, are those related to the population of grantees (loss of rights) level of volatility used by the Group takes account of historical volatility and internal performance conditions. The Group’s share-based payment trends for the benchmark index and BNP Paribas shares over a 10-year plans are valued by an independent specialist fi rm. period.
2010 Registration document and fi nancial report - BNP PARIBAS 199 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Stock subscription options granted in 2010 were valued at between EUR 13.28 and EUR 14.98 depending on whether or not they are subject to performance conditions according to the various secondary award tranches (compared with EUR 11.70 and EUR 13.57, respectively in 2009). Year to 31 Dec. 2010 Year to 31 Dec. 2009
Plan granted on 5 March 2010 Plan granted on 6 April 2009 BNP Paribas share price on the grant date (in euros) 54.97 36.00 Option exercise price (in euros) 51.20 35.11 Implied volatility of BNP Paribas shares 27.6% 39.9% Expected option holding period 8 years 8 years Expected dividend on BNP Paribas shares (1) 3.0% 2.5% Risk-free interest rate 3.2% 3.2% Expected proportion of options that will be forfeited 1.5% 1.5% (1) The dividend yield indicated above is the average of a series of estimated annual dividends.
Measurement of share awards The unit value used to measure shares awarded free of consideration is the value at the end of the compulsory holding period plus dividends paid since the vesting date, discounted at the grant date. Year to 31 Dec. 2010 Plan Year to 31 Dec. 2009 Plan 4 granted on 5 March 2010 granted on 6 April 2009 Vested on Vested on Vested on Vested on 5 March 2013 5 March 2014 10 April 2012 8 April 2013 BNP Paribas share price on the grant date (in euros) 54.97 54.97 36.00 36.00 Date of availability 6 March 2015 5 March 2014 10 April 2014 8 April 2013 Expected dividend on BNP Paribas shares (1) 3.01% 3.01% 2.50% 2.50% Risk-free interest rate 2.50% 2.21% 2.65% 2.39% Expected proportion of options that will be forfeited 2.00% 2.00% 2.00% 2.00% THEORETICAL UNIT VALUE €50.00 €48.57 €33.20 €32.55 (1) The dividend yield indicated above is the average of a series of estimated annual dividends.
200 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
History of plans granted under the Global Share-Based Incentive Plan The tables below give details of the characteristics and terms of all unexpired plans at 31 December 2010:
➤ STOCK SUBSCRIPTION OPTION PLANS
Options outstanding Characteristics of the plan at end of period Adjusted Remaining Number Start date exercise period until Originating Number of of options of exercise Option price Number expiry of company Date of grant grantees granted (1) period expiry date (in euros) (1) of options (1) options (years) BNL (4) 13/09/1999 137 614,763 13/09/2001 13/09/2011 82.05 410,557 1 BNL (4) 20/10/2000 161 504,926 20/10/2003 20/10/2013 103.55 424,518 3 BNP Paribas SA (1) (2) 15/05/2001 932 6,069,000 15/05/2005 14/05/2011 47.37 2,434,358 1 BNL (4) 26/10/2001 223 573,250 26/10/2004 26/10/2014 63.45 4,739 4 BNL (4) 26/10/2001 153 479,685 26/10/2004 26/10/2012 63.45 2,073 2 BNP Paribas SA (2) 31/05/2002 1,384 2,158,570 31/05/2006 30/05/2012 58.02 1,033,565 2 BNP Paribas SA (3) 21/03/2003 1,302 6,693,000 21/03/2007 20/03/2013 35.87 2,982,978 3 BNP Paribas SA (3) 24/03/2004 1,458 1,779,850 24/03/2009 21/03/2014 48.15 1,304,926 4 4 BNP Paribas SA (3) 25/03/2005 2,380 4,332,550 25/03/2010 22/03/2013 53.28 4,062,017 3 BNP Paribas SA (3) 05/04/2006 2,583 3,894,770 06/04/2010 04/04/2014 73.40 3,627,375 4 BNP Paribas SA (3) 08/03/2007 2,023 3,630,165 08/03/2011 06/03/2015 80.66 3,457,593 5 BNP Paribas SA (3) 06/04/2007 219 405,680 06/04/2011 03/04/2015 76.57 378,573 5 BNP Paribas SA (3) 18/04/2008 2,402 3,985,590 18/04/2012 15/04/2016 64.47 3,870,367 6 BNP Paribas SA (3) 06/04/2009 1,397 2,376,600 08/04/2013 05/04/2017 35.11 2,355,161 7 BNP Paribas SA (3) 05/03/2010 1,820 2,423,700 05/03/2014 02/03/2018 51.20 2,403,800 8 TOTAL OPTIONS OUTSTANDING AT END OF PERIOD 28,752,600 (1) The number of options and the exercise price have been adjusted, where appropriate, for the two-for-one BNP Paribas share split that took place on 20 February 2002, and the pre-emptive subscription rights allotted on 7 March 2006 and 30 September 2009, in accordance with the regulations in force. (2) These options were subject to vesting conditions related to the fi nancial performance of the Group as measured by the ratio of net income (attributable to equity holders) to average shareholders’ equity for the year in question. The minimum requirement is an average ratio of 16% over four years starting in the year of grant, or alternatively over three rolling years starting in the second year after the year of grant. This condition has been met for the plans concerned. (3) The plan is subject to vesting conditions under which a proportion of the options granted to employees is conditional upon the performance of the BNP Paribas share relative to the Dow Jones Euro Stoxx Bank index during the applicable holding period. Based on this relative performance condition, the adjusted exercise price for these options has been set at: - EUR 37.67 for 391,950 options under the 21 March 2003 plan, outstanding at the year-end - EUR 50.55 for 3,080 options under the 24 March 2004 plan, outstanding at the year-end - EUR 55.99 for 175,139 options under the 25 March 2005 plan, outstanding at the year-end - EUR 77.06 for 164,346 options under the 5 April 2006 plan, outstanding at the year-end (4) Following the merger between BNL and BNP Paribas on 1 October 2007, stock option plans granted by BNL between 1999 and 2001 entitle benefi ciaries to subscribe to BNP Paribas shares as of the date of the merger. Benefi ciaries may subscribe to the shares based on a ratio of 1 BNP Paribas share for 27 BNL shares. The exercise price has been adjusted in line with this ratio.
2010 Registration document and fi nancial report - BNP PARIBAS 201 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
➤ SHARE AWARD PLANS
Characteristics of the plan Number Expiry date of Number of shares Number of of shares Vesting date holding period for outstanding at end Originating company Date of grant grantees granted of share granted (1) shares granted of period (2) BNP Paribas SA 2006-2008 - - - - 2,009 BNP Paribas SA 06/04/2009 2,247 359,930 10/04/2012 10/04/2014 366,337 BNP Paribas SA 06/04/2009 1,686 278,325 08/04/2013 08/04/2013 276,891 BNP Paribas SA 05/03/2010 2,536 510,445 05/03/2013 05/03/2015 507,670 BNP Paribas SA 05/03/2010 2,661 487,570 05/03/2014 05/03/2014 484,960 TOTAL SHARES OUTSTANDING AT END OF PERIOD 1,637,867 (1) The vesting date for certain shares has been deferred due to the benefi ciaries’ absence on the date initially scheduled. (2) The number of shares has been adjusted for the pre-emptive subscription rights allotted on 30 September 2009.
Movements over the past two years ➤ STOCK SUBSCRIPTION OPTION PLANS
4 2010 2009 Weighted average Weighted average Number exercise price Number exercise price of options (in euros) of options (in euros) OPTIONS OUTSTANDING AT 1 JANUARY 28,041,693 58.15 27,302,391 59.60 Options granted during the period 2,423,700 51.20 2,376,600 35.11 Options arising from September 2009 capital increase 705,521 Options exercised during the period (1,117,744) 42.91 (1,898,604) 54.01 Options expired during the period (595,049) (444,215) OPTIONS OUTSTANDING AT 31 DECEMBER 28,752,600 58.05 28,041,693 58.15 OPTIONS EXERCISABLE AT 31 DECEMBER 16,287,106 55.62 13,935,548 49.95
The average quoted stock market price for the option exercise period in 2010 was EUR 55.56 (EUR 43.22 in 2009).
➤ SHARE AWARD PLANS
2010 2009
Number of shares Number of shares SHARES OUTSTANDING AT 1 JANUARY 1,525,322 1,773,186 Shares granted during the period 998,015 638,255 Shares vested during the period (865,543) (873,826) Shares expired during the period (19,927) (52,662) Adjustment linked to the increase in capital through the subscription of preferential subscription rights 40,369 SHARES OUTSTANDING AT 31 DECEMBER 1,637,867 1,525,322
202 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
➤ SHARES SUBSCRIBED OR PURCHASED BY EMPLOYEES UNDER THE COMPANY SAVINGS PLAN
Year to 31 Dec. 2010 Year to 31 Dec. 2009 Date plan announced 12 May 2010 5 May 2009 Quoted price of BNP Paribas shares at date plan announced (in euros) 51.32 41.85 Number of shares issued or transfered 3,700,076 8,999,999 Purchase or subscription price (in euros) 42.00 29.40 Five-year risk-free interest rate 1.90% 2.69% Five-year borrowing cost 7.13% 8.50% Borrowing cost during the holding period 22.12% 24.06%
The Group did not recognise an expense in relation to the Company Of the total number of BNP Paribas Group employees who were offered Savings Plan as the discount granted to employees subscribing shares the opportunity of buying shares under the Plan in 2010, 31% accepted under this plan represented a negligible fi nancial expense for BNP Paribas the offer and 69% turned it down. when valued taking into account the fi ve-year compulsory holding period applicable to the shares purchased.
4 Note 8 ADDITIONAL INFORMATION
8.a CHANGES IN SHARE CAPITAL AND EARNINGS PER SHARE
Resolutions of the Shareholders’ General Meeting valid for 2010 The following authorisations to increase or reduce the share capital have been granted to the Board of Directors under resolutions voted in Shareholders’ General Meetings and were valid during 2010: Use of authorisation Resolutions adopted at Shareholders’ General Meetings in 2010 Shareholders’ General Meeting Authorisation to award shares for no consideration to employees 998,015 free shares of 21 May 2008 (21st resolution) and corporate offi cers of BNP Paribas and related companies awarded at the Board The shares awarded may be existing shares or new shares to be issued and meeting of 5 March 2010 may not exceed 1.5% of BNP Paribas’ share capital, i.e. less than 0.5% a year. This authorisation was granted for a period of 38 months. Shareholders’ General Meeting Authorisation to grant stock subscription or purchase options to corporate 2,423,700 stock of 21 May 2008 (22nd resolution) offi cers and certain employees subscription options The number of options granted may not exceed 3% of BNP Paribas’ share granted at the Board capital, i.e. less than 1% a year. This is a blanket limit covering both the 21st meeting of 5 March 2010 and 22nd resolutions of the Shareholders’ General Meeting of 21 May 2008. This authorisation was granted for a period of 38 months.
2010 Registration document and fi nancial report - BNP PARIBAS 203 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Use of authorisation Resolutions adopted at Shareholders’ General Meetings in 2010 Shareholders’ General Meeting Authorisation given to the Board of Directors to set up an ordinary share Excluding the market- of 13 May 2009 buyback programme for the Company until it holds at most 10% of the share making agreement (5th resolution) capital. 800,000 shares with These acquisitions may be used for several purposes, notably: a par value of EUR 2 were ■ the award or sale of shares to employees in connection with the employee purchased in March 2010. profi t-sharing scheme, employee share ownership plans or corporate Under the market-making savings plans, stock option programmes and the award of free shares agreement, to members of staff; 1,809,576 shares with ■ the cancellation of shares following authorisation by the Shareholders’ a par value of EUR 2 General Meeting (15th resolution of the Shareholders’ General Meeting were acquired and of 13 May 2009); 1,806,987 shares with a ■ remittance in exchange or payment for external growth transactions; par value of EUR 2 were ■ implementation of a liquidity agreement. sold during 2010. This authorisation was granted for a period of 18 months and was nullifi ed by the 5th resolution of the Shareholders’ General Meeting of 12 May 2010. Shareholders’ General Meeting Authorisation to reduce the share capital by cancelling shares. 600,000 shares of 13 May 2009 Authorisation was given to cancel on one or more occasions through with a par value (15th resolution) a reduction in the share capital all or some of the shares that BNP Paribas of EUR 2 were cancelled holds and that it may come to hold, provided that the number of shares on 30 March 2010 cancelled in any 24-month period does not exceed 10% of the total number 4 of shares at the operation date. Full powers were delegated to complete the capital reduction and deduct the difference between the purchase cost of the cancelled shares and their par value from additional paid-in capital and reserves available for distribution, including from the legal reserve in respect of up to 10% of the capital cancelled. This authorisation was granted for a period of 18 months and was nullifi ed by the 20th resolution of the Shareholders’ General Meeting of 12 May 2010. Shareholders’ General Meeting Resolution to propose a dividend payable in cash or in new shares. 9,160,218 new shares of 12 May 2010 Payment of the dividend in new shares had the effect of increasing the share with a par value (3rd resolution) capital by EUR 18,320,436, or 9,160,218 shares, generating additional paid-in of EUR 2 were issued capital of EUR 401,858,763.66. on 15 June 2010 Shareholders’ General Meeting Authorisation given to the Board of Directors to set up an ordinary share This authorisation was not of 12 May 2010 buyback programme for the Company until it holds at most 10% of the share used during the period. (5th resolution) capital. These acquisitions may be used for several purposes, notably: ■ the award or sale of shares to employees in connection with the employee profi t-sharing scheme, employee share ownership plans or corporate savings plans, stock option programmes and the award of free shares to members of staff; ■ the cancellation of shares following authorisation by the Shareholders’ General Meeting (20th resolution of the Shareholders’ General Meeting of 12 May 2010); ■ remittance in exchange or payment for external growth transactions; ■ implementation of a liquidity agreement. This authorisation was granted for a period of 18 months and supersedes that given by the 5th resolution of the Shareholders’ General Meeting of 13 May 2009.
204 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Use of authorisation Resolutions adopted at Shareholders’ General Meetings in 2010 Shareholders’ General Meeting Authorisation to issue ordinary shares and share equivalents This authorisation was not of 12 May 2010 with pre-emptive rights for existing shareholders maintained. used during the period (12th resolution) The par value of the capital increases that may be carried out immediately and/or in the future by virtue of this authorisation may not exceed EUR 1 billion (representing 500 million shares). The par value of any debt instruments giving access to the capital of BNP Paribas that may be issued by virtue of this authorisation may not exceed EUR 10 billion. This authorisation was granted for a period of 26 months and supersedes that given by the 13th resolution of the Shareholders’ General Meeting of 21 May 2008. Shareholders’ General Meeting Authorisation to issue ordinary shares and share equivalents, This authorisation was not of 12 May 2010 with pre-emptive rights for existing shareholders waived, and a priority used during the period (13th resolution) subscription period granted. The par value of the capital increases that may be carried out immediately and/or in the future by virtue of this authorisation may not exceed EUR 350 million (representing 175 million shares). The par value of any debt instruments giving access to the capital of BNP Paribas that may be issued by virtue of this authorisation may not exceed EUR 7 billion. This authorisation was granted for a period of 26 months and supersedes 4 that given by the 14th resolution of the Shareholders’ General Meeting of 21 May 2008. Shareholders’ General Meeting Authorisation to issue ordinary shares and share equivalents, This authorisation was not of 12 May 2010 with pre-emptive rights for existing shareholders waived, in consideration used during the period (14th resolution) for securities tendered to public exchange offer. The par value of the capital increases that may be carried out on one or more occasions by virtue of this authorisation may not exceed EUR 350 million. This authorisation was granted for a period of 26 months and supersedes that given by the 15th resolution of the Shareholders’ General Meeting of 21 May 2008. Shareholders’ General Meeting Authorisation to issue ordinary shares and share equivalents, This authorisation was not of 12 May 2010 with pre-emptive rights for existing shareholders waived, in consideration used during the period (15th resolution) for securities tendered to contributions of unlisted shares (up to a maximum of 10% of the capital) The par value of the capital increases that may be carried out on one or more occasions by virtue of this authorisation may not exceed 10% of the number of shares comprising the issued capital of BNP Paribas. This authorisation was granted for a period of 26 months and supersedes that given by the 13th resolution of the Shareholders’ General Meeting of 13 May 2009. Shareholders’ General Meeting Blanket limit on authorisations to issue shares with pre-emptive rights Not applicable of 12 May 2010 for existing shareholders waived. (16th resolution) The maximum par value of all issues made with pre-emptive rights for existing shareholders waived by virtue of the authorisations granted under the 13th to 15th resolutions of the Shareholders’ General Meeting of 12 May 2010 may not exceed EUR 350 million for shares immediately and/or in the future and EUR 7 billion for debt instruments.
2010 Registration document and fi nancial report - BNP PARIBAS 205 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Use of authorisation Resolutions adopted at Shareholders’ General Meetings in 2010 Shareholders’ General Meeting Issue of shares to be paid up by capitalising income, retained earnings This authorisation was not of 12 May 2010 or additional paid-in capital. used during the period (17th resolution) Authorisation was given to increase the issued capital within the limit of a maximum par value of EUR 1 billion on one or more occasions, by capitalising all or part of the retained earnings, profi ts or additional paid-in capital, successively or simultaneously, through the issuance and award of free ordinary shares, through an increase in the par value of existing shares, or through a combination of these two methods. This authorisation was granted for a period of 26 months and supersedes that given by the 4th resolution of the Extraordinary Shareholders’ Meeting of 27 March 2009. Shareholders’ General Meeting Blanket limit on authorisations to issue shares with or without pre-emptive Not applicable of 12 May 2010 rights for existing shareholders. (18th resolution) The maximum par value of all issues made with or without pre-emptive rights for existing shareholders by virtue of the authorisations granted under the 12th to 15th resolutions of the Shareholders’ General Meeting of 12 May 2010 may not exceed EUR 1 billion for shares immediately and/or in the future and EUR 10 billion for debt instruments. Shareholders’ General Meeting Authorisation granted to the Board of Directors to carry out transactions Issue of 3,700,076 new of 12 May 2010 reserved for members of the BNP Paribas Group’s Corporate Savings Plan ordinary shares with a par 4 (19th resolution) in the form of new share issues and/or sales of reserved shares. value of EUR 2 recorded Authorisation was given to increase the share capital within the limit of on 16 July 2010 a maximum par value of EUR 46 million on one or more occasions by issuing ordinary shares, with pre-emptive rights for existing shareholders waived, reserved for members of the BNP Paribas Group’s Corporate Savings Plan. The transactions authorised by this resolution may also take the form of sales of shares to members of the BNP Paribas Group’s Corporate Savings Plan. This authorisation was granted for a period of 26 months and supersedes that given by the 3rd resolution of the Extraordinary Shareholders’ Meeting of 27 March 2009. Shareholders’ General Meeting Authorisation to reduce the share capital by cancelling shares. This authorisation was not of 12 May 2010 Authorisation was given to cancel on one or more occasions through used during the period (20th resolution) a reduction in the share capital all or some of the shares that BNP Paribas holds and that it may come to hold, provided that the number of shares cancelled in any 24-month period does not exceed 10% of the total number of shares in issue on the transaction date. Full powers were delegated to complete the capital reduction and deduct the difference between the purchase cost of the cancelled shares and their par value from additional paid-in capital and reserves available for distribution, including from the legal reserve in respect of up to 10% of the capital cancelled. This authorisation was granted for a period of 18 months and supersedes that given by the 15th resolution of the Shareholders’ General Meeting of 13 May 2009. Shareholders’ General Meeting Approval of the merger-absorption of Fortis Banque France by BNP Paribas 354 new shares of 12 May 2010 and corresponding increase in the share capital. with a par value of EUR 2 (21st resolution) Issue of 354 new ordinary shares with a par value of EUR 2 pursuant on 12 May 2010 to the merger-absorption of Fortis Banque France duly placed on record on 12 May 2010.
206 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Share capital transactions Date Par of authorisation Date of decision Date from which Number value by Shareholders’ by Board shares carry Operations affecting share capital of shares (in euros) in euros Meeting of Directors dividend rights Number of shares outstanding at 31 December 2008 912,096,107 2 1,824,192,214 Increase in share capital by exercise of stock subscription options 74,024 2 148,048 (1) (1) 01 January 08 Increase in share capital by exercise of stock subscription options 1,824,582 2 3,649,164 (1) (1) 01 January 09 Capital increase arising on the acquisition of Fortis 133,435,603 2 266,871,206 (2) (2) 01 January 09 Capital increase arising on the issuance of non-voting shares 187,224,669 2 374,449,338 27 March 09 27 March 09 - Capital increase reserved for members of the Company Savings Plan 9,000,000 2 18,000,000 27 March 09 05 May 09 01 January 09 Capital increase arising on the payment of a stock dividend 21,420,254 2 42,840,508 13 May 09 13 May 09 01 January 09 Capital decrease (219,294) 2 (438,588) 13 May 09 03 August 09 - 4 Capital increase 107,650,488 2 215,300,976 21 May 08 25 September 09 01 January 09 Capital decrease arising on the cancellation of non-voting shares (187,224,669) 2 (374,449,338) - 04 November 09 - Number of shares outstanding at 31 December 2009 1,185,281,764 2 2,370,563,528 Increase in share capital by exercise of stock subscription options 595,215 2 1,190,430 (1) (1) 01 Januay 09 Increase in share capital by exercise of stock subscription options 522,529 2 1,045,058 (1) (1) 01 Januay 10 Capital decrease (600,000) 2 (1,200,000) 13 May 09 05 March 10 - Capital increase arising on the merger of Fortis Bank France 354 2 708 12 May 10 12 May 10 01 Januay 10 Capital increase arising on the payment of a stock dividend 9,160,218 2 18,320,436 12 May 10 12 May 10 01 Januay 10 Capital increase reserved for members of the Company Savings Plan 3,700,076 2 7,400,152 12 May 10 12 May 10 01 Januay 10 Number of shares outstanding at 31 December 2010 1,198,660,156 2 2,397,320,312 (1) Various resolutions voted in the Shareholders’ General Meetings and decisions of the Board of Directors authorising the granting of stock subscription options that were exercised during the period. (2) Various resolutions adopted by the Shareholders’ General Meeting and decisions made by the Board of Directors authorising the issues of shares related to the acquisition of Fortis.
2010 Registration document and fi nancial report - BNP PARIBAS 207 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Issues of new shares pursuant to the As a result of these four asset contributions, BNP Paribas’ share capital acquisition of Fortis Bank SA/NV and BGL SA increased by 133,435,603 ordinary shares, each with a par value of EUR 2. BNP Paribas signed an agreement with the Belgian government and Non-voting shares issued by BNP Paribas Luxembourg government related to the acquisition by BNP Paribas of certain Fortis group companies from the Belgian government acting via Following the authorisation granted by the Shareholders’ General Meeting the SFPI and the Luxembourg government (hereinafter the “transaction”). on 27 March 2009, BNP Paribas issued 187,224,669 non-voting shares on The transaction comprised four asset contributions, with an issue of 31 March 2009 at a unit price of EUR 27.24, representing a total amount shares carried out in consideration for each one: of EUR 5.1 billion, to Société de Prise de Participation de l’Etat (SPPE) in connection with the French government’s economic stimulus plan. These ■ 88,235,294 ordinary BNP Paribas shares each with a par value of EUR 2 shares do not carry any voting rights, are not convertible into ordinary for the First Contribution, which consisted in the transfer by SFPI of shares and entitle their holders to receive a dividend only if a dividend 263,586,083 Fortis Bank SA/NV shares, representing around 54.55% is paid to holders of the ordinary shares. The dividend amounts to 105% of the latter’s share capital and voting rights. The Board of Directors pro rata temporis of the dividend paid on ordinary shares in respect approved the First Contribution on 12 May 2009 using the authorisation to 2009 and is subject to a cap and fl oor stated as a percentage of the granted under the 16th resolution passed at the Shareholders’ General issue price. The fl oor is a fi xed rate of 7.65% for 2009 pro rata temporis. Meeting of 21 May 2008. The shares issued in consideration for this contribution were covered by a lock-up commitment that runs until These non-voting shares were bought back on 28 October 2009 and were 10 October 2010; subsequently cancelled on 26 November 2009. ■ 32,982,760 ordinary BNP Paribas shares each with a par value of EUR 2 for the Second Contribution, which consists in the transfer by Own equity instruments (shares issued SFPI of 98,529,695 additional Fortis Bank SA/NV shares, representing by BNP Paribas and held by the Group) 4 around 20.39% of the latter’s share capital and voting rights. The In accordance with the fi fth resolution of the Shareholders’ General Shareholders’ General Meeting on 13 May 2009 approved this Second Meeting of 12 May 2010 replacing and superseding the fi fth resolution Contribution, formally recorded its defi nitive completion and that of of the Shareholders’ General Meeting of 13 May 2009, BNP Paribas was the corresponding issue of shares under its 11th resolution; authorised to buy back shares representing up to 10% of the BNP Paribas’ ■ 11,717,549 ordinary BNP Paribas shares each with a par value of issued capital at a maximum purchase price of EUR 75 per share EUR 2 for the Third Contribution, which consists in the transfer by (compared with EUR 68 previously). The shares may be acquired for the the Luxembourg government of 4,540,798 BGL SA shares, representing following purposes: for subsequent cancellation under the terms set by around 16.57% of the latter’s share capital and voting rights. The the Shareholders’ General Meeting, to fulfi l its obligations relative to Shareholders’ General Meeting on 13 May 2009 approved this Third the issue of shares or share equivalents, stock option plans, the award Contribution, formally recorded its defi nitive completion and that of the of free shares, the award or sale of shares to employees in connection corresponding issue of shares under its 12th resolution. The Luxembourg with the employee profi t-sharing scheme, employee share ownership government undertook to hold the 5,858,774 shares received in plans or corporate savings plans and to cover any allocation of shares consideration for its asset contribution until 23 October 2009; to the employees of BNP Paribas and companies exclusively controlled by BNP Paribas within the meaning of Article L.233-16 of the French ■ 500,000 ordinary BNP Paribas shares each with a par value of Commercial Code; to be held in treasury stock for subsequent remittance EUR 2 for the Fourth Contribution, consisting of in the transfer by in exchange or as payment for external growth, merger, spin-off or asset the Luxembourg government of 193,760 BGL SA shares, representing contribution transactions; within the scope of a liquidity agreement around 0.69% of the latter’s share capital and voting rights. The Board complying with the Code of Ethics recognised by the AMF; or for asset of Directors approved this Fourth Contribution, formally recorded its and fi nancial management purposes. defi nitive completion and that of the corresponding issue of shares on 13 May 2009, using the authorisation granted to it by the Shareholders’ This latter authorisation was granted for a period of 18 months. General Meeting of 13 May 2009 under its 13th resolution. The Grand In addition, one of the Group’s subsidiaries involved in trading and Duchy of Luxembourg undertook to hold the 250,000 shares received in arbitrage transactions on equity indices sells shares issued by consideration for its asset contribution until 23 October 2009. BNP Paribas short in connection with its activities.
208 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Shares issued by BNP Paribas and held by the Group Proprietary transactions Trading account transactions Total Carrying Carrying Carrying amount amount amount Number (in millions Number (in millions Number (in millions of shares of euros) of shares of euros) of shares of euros) Shares held at 31 December 2008 5,448,848 345 (1,450,832) (44) 3,998,016 301 Acquisitions 127,087 5 127,087 5 Shares delivered to employees (1,079,980) (78) (1,079,980) (78) Other movements (847,639) (61) (2,953,477) (202) (3,801,116) (263) Shares held at 31 December 2009 3,648,316 211 (4,404,309) (246) (755,993) (35) Acquisitions 2,609,576 140 2,609,576 140 Shares delivered to employees (921,772) (55) (921,772) (55) Capital decrease (600,000) (40) (600,000) (40) Other movements (1,821,942) (94) (95,485) 32 (1,917,427) (62) Shares held at 31 December 2010 2,914,178 162 (4,499,794) (214) (1,585,616) (52)
During 2010, pursuant to the aforementioned authorisations, BNP Paribas In October 2001, BNP Paribas Capital Trust III, a subsidiary under the 4 SA bought back 800,000 shares in the market at an average price of exclusive control of the Group, made a EUR 500 million issue of undated EUR 58.63 per share each with a par value of EUR 2, with a view to non-cumulative preferred shares. The shares pay a fi xed rate dividend for honouring the obligations under the employee share ownership and a period of ten years. They are redeemable at the issuer’s discretion after incentive plans. a ten-year period, and thereafter at each coupon date, with unredeemed shares paying a Euribor-indexed dividend. Under the Bank’s market-making agreement with Exane BNP Paribas, and in line with the Code of Ethics recognised by the AMF, BNP Paribas In January 2002, BNP Paribas Capital Trust IV, a subsidiary under the SA bought back 1,809,576 shares during 2010 at an average share price exclusive control of the Group, made a EUR 660 million issue of undated of EUR 51.41, and sold 1,806,987 treasury shares at an average share non-cumulative preferred shares. The shares pay a fi xed rate annual price of EUR 51.63. At 31 December 2010, 149,596 shares worth EUR 7.6 dividend over ten years. They are redeemable at the issuer’s discretion million were held by BNP Paribas under this agreement. after a ten-year period, and thereafter at each coupon date, with unredeemed shares paying a Euribor-indexed dividend. From 1 January to 31 December 2010, 865,220 BNP Paribas shares were delivered following the defi nitive award of free shares to their In January 2003, BNP Paribas Capital Trust VI, a subsidiary under the benefi ciaries. exclusive control of the Group, made a EUR 700 million issue of undated non-cumulative preferred shares. The shares pay an annual fi xed rate Preferred shares and Undated Super dividend. They are redeemable at the end of a 10-year period and Subordinated Notes (TSSDI) eligible as Tier 1 thereafter at each coupon date. Shares not redeemed in 2013 will pay a regulatory capital Euribor-indexed quarterly dividend. In 2003 and 2004, the LaSer-Cofi noga sub-group – which is proportionately Preferred shares issued by the Group’s foreign consolidated by BNP Paribas – made three issues of undated non-voting subsidiaries preferred shares through special purpose entities governed by UK law and In October 2000, BNP Paribas Capital Trust, a subsidiary under the exclusively controlled by the LaSer-Cofi noga sub-group. These shares pay exclusive control of the Group, made a USD 500 million issue of undated a non-cumulative preferred dividend for a ten-year period, at a fi xed rate non-cumulative preferred shares governed by the laws of the United for those issued in 2003 and an indexed rate for the 2004 issue. After this States, which did not dilute BNP Paribas ordinary shares. The shares ten-year period, they will be redeemable at par at the issuer’s discretion pay a fi xed rate dividend for a period of ten years. Thereafter, they are at the end of each quarter on the coupon date, and the dividend payable redeemable at par at the issuer’s discretion at the end of each calendar on the 2003 issue will become Euribor-indexed. quarter, with unredeemed shares paying a Libor-indexed dividend. The issuer has the option of not paying dividends on these preferred shares if no dividends are paid on BNP Paribas SA ordinary shares and no coupons are paid on preferred share equivalents (Undated Super Subordinated Notes) in the previous year. Unpaid dividends are not carried forward. This issue was repaid during 2010.
2010 Registration document and fi nancial report - BNP PARIBAS 209 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
➤ PREFERRED SHARES ISSUED BY THE GROUP’S SUBSIDIARIES
Amount Rate and term Issuer Date of issue Currency (in million of euros) before 1st call date Rate after 1st call date BNPP Capital Trust III October 2001 EUR 500 6.625% 10 years 3-month Euribor +2.6% BNPP Capital Trust IV January 2002 EUR 660 6.342% 10 years 3-month Euribor +2.33% BNPP Capital Trust VI January 2003 EUR 700 5.868% 10 years 3-month Euribor +2.48% Cofi noga Funding I LP March 2003 EUR 100 (1) 6.820% 10 years 3-month Euribor +3.75% January and TEC 10 (2) Cofi noga Funding II LP May 2004 EUR 80 (1) +1.35% 10 years TEC 10 (2) +1.35% TOTAL 1,892(3) (1) Before application of the proportionate consolidation rate. (2) TEC 10 is the daily long-term government bond index, corresponding to the yield-to-maturity of a fi ctitious 10-year Treasury note. (3) net of shares held in treasury by Group entities.
The proceeds of these issues are recorded under “Minority interests” at the end of a fi xed period and thereafter at each coupon date. Some in the balance sheet, and the dividends are reported under “Minority of these issues will pay a coupon indexed to Euribor or Libor if the notes interests” in the profi t and loss account. are not redeemed at the end of this period. 4 At 31 December 2010, the BNP Paribas Group held EUR 58 million in The EUR 2,550 million issue subscribed in December 2008 by Société preferred shares (EUR 60 million at 31 December 2009), deducted from de Prise de Participation de l’Etat was redeemed upon the issue of the minority interests. non-voting shares in March 2009.
Undated Super Subordinated Notes issued Fortis Banque France, company absorbed by BNP Paribas SA on by BNP Paribas SA 12 May 2010, carried out a EUR 60 million issue during December 2007 of Undated Super Subordinated Notes. This issue offers investors a fl oating Since 2005, BNP Paribas SA has carried out nineteen issues of Undated rate of interest and may be repaid after 10 years and thereafter at each Super Subordinated Notes representing a total amount of EUR 10,612 coupon date. million. The notes pay a fi xed or fl oating rate coupon and are redeemable
210 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
The table below summarises the characteristics of these various issues:
➤ UNDATED SUPER SUBORDINATED NOTES
Amount Coupon Rate and term Date of issue Currency (in million) payment date before 1st call date Rate after 1st call date USD 3-month Libor June 2005 USD 1,350 semi-annual 5.186% 10 years +1.680% October 2005 EUR 1,000 annual 4.875% 6 years 4.875% October 2005 USD 400 annual 6.250% 6 years 6.250% April 2006 EUR 750 annual 4.730% 10 years 3-month Euribor +1.690% GBP 3-month Libor April 2006 GBP 450 annual 5.945% 10 years +1.130% July 2006 EUR 150 annual 5.450% 20 years 3-month Euribor +1.920% GBP 3-month Libor July 2006 GBP 325 annual 5.945% 10 years +1.810% April 2007 EUR 750 annual 5.019% 10 years 3-month Euribor +1.720% June 2007 USD 600 quarterly 6.500% 5 years 6.50% USD 3-month Libor June 2007 USD 1,100 semi-annual 7.195% 30 years +1.290% 4 GBP 3-month Libor October 2007 GBP 200 annual 7.436% 10 years +1.850% 3-month Euribor December 2007 EUR 60 (1) quarterly +2,880% 10 years 3-month Euribor +3.880% June 2008 EUR 500 annual 7.781% 10 years 3-month Euribor +3.750% September 2008 EUR 650 annual 8.667% 5 years 3-month Euribor +4.050% September 2008 EUR 100 annual 7.570% 10 years 3-month Euribor +3.925% 3-month Euribor December 2009 EUR 2 quarterly +3.750% 10 years 3-month Euribor +4.750% December 2009 EUR 17 annual 7.028% 10 years 3-month Euribor +4.750% USD 3-month USD 3-month Libor December 2009 USD 70 quarterly Libor +3.750% 10 years +4.750% USD 3-month Libor December 2009 USD 0.5 annual 7.384% 10 years +4.750% TOTAL EURO-EQUIVALENT VALUE 8,029 (2) (1) Through the merger by absorption of Fortis Banque France on 12 May 2010. (2) Net of shares held in treasury by Group entities.
BNP Paribas has the option of not paying interest due on these Undated The proceeds from these issues are recorded in equity under “Retained Super Subordinated Notes if no dividends were paid on BNP Paribas SA earnings”. In accordance with IAS 21, issues denominated in foreign ordinary shares or on Undated Super Subordinated Note equivalents in currencies are recognised at their historical value based on their the previous year. Unpaid interest is not carried forward. translation into euros at the issue date. Interest on the instruments is treated in the same way as dividends. The contracts relating to these Undated Super Subordinated Notes contain a loss absorption clause. Under the terms of this clause, in the At 31 December 2010, the BNP Paribas Group held EUR 93 million event of insuffi cient regulatory capital–which is not fully offset by a of Undated Super Subordinated Notes which were deducted from capital increase or any other equivalent measure–the nominal value shareholders’ equity. of the notes may be reduced in order to serve as a new basis for the calculation of the related coupons until the capital defi ciency is made up and the nominal value of the notes is increased to its original amount. However, in the event of the liquidation of BNP Paribas SA, the amount due to the holders of these notes will represent their original nominal value irrespective of whether or not their nominal value has been reduced.
2010 Registration document and fi nancial report - BNP PARIBAS 211 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Basic earnings per share Diluted earnings per share corresponds to net income for the year divided by the weighted average number of shares outstanding as adjusted for Basic earnings per share is calculated by dividing the net income for the the maximum effect of the conversion of dilutive equity instruments period attributable to ordinary shareholders by the weighted average into ordinary shares. In-the-money stock subscription options are taken number of ordinary shares outstanding during the period. The net income into account in the diluted earnings per share calculation, as are share attributable to ordinary shareholders is determined by deducting the net awards made under the Global Share-based Incentive Plan. Conversion income attributable to holders of preferred shares. of these instruments would have no effect on the net income fi gure used in this calculation.
Year to 31 Dec. 2010 Year to 31 Dec. 2009 Net income used to calculate basic and diluted earnings per ordinary share (in millions of euros) (1) 7,531 5,504 Weighted average number of ordinary shares outstanding during the year 1,188,848,011 1,057,526,241 Effect of potentially dilutive ordinary shares
■ Stock subscription plan (2) 1,668,736 641,601
■ Share award plan (2) 773,515 999,589
■ Stock purchase plan 39,191 69,725 Weighted average number of ordinary shares used to calculate diluted earnings per share 1,191,329,452 1,059,237,156 Basic earnings per share (in euros) 6.33 5.20 4 Diluted earnings per share (in euros) 6.32 5.20 (1) Net income used to calculate basic and diluted earnings per share is net income per the profi t and loss account, adjusted for the remuneration on the preferred shares and the Undated Super Subordinated Notes issued by BNP Paribas SA (treated as preferred share equivalents), which for accounting purposes is handled as dividends. (2) See note 7.c Share-base payment.
The dividend per share paid in 2010 out of 2009 net income amounted to EUR 1.5 compared with EUR 1 per share paid in 2009 out of 2008 net income.
8.b SCOPE OF CONSOLIDATION
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) Consolidating company 31/12/2010 Additional Full 100.00% 100.00% BNP Paribas SA France Full 100.00% 100.00% Fortis Mediacom Finance 1 France purchase 31/12/2009 Purchase Full 99.99% 74.91% Retail Banking - France 31/12/2010 < thresholds Banque de Bretagne (*) France Full 100.00% 100.00% GIE Services Groupe Fortis France 1 France 31/12/2009 Purchase Full 80.33% 59.51% BNP Paribas Développement SA France Full 100.00% 100.00% 31/12/2010 < thresholds BNP Paribas Factor (*) France Full 100.00% 100.00% GIE Immobilier Groupe Fortis France 1 France 31/12/2009 Purchase Full 92.48% 68.10% BNP Paribas Factor Portugal Portugal Full 100.00% 100.00% BeLux Retail Banking 31/12/2010 Additional Equity 44.62% 44.62% Compagnie pour le Financement des France purchase 31/12/2010 Equity 50.00% 37.47% Loisirs - Cofi loisirs Alpha Card SCRL 1 Belgium 31/12/2009 Equity 33.33% 33.33% 31/12/2009 Purchase Equity 50.00% 37.47% Additional 31/12/2010 Equity 40.68% 21.73% 31/12/2010 purchase Alsabail 1 France Fimagen Holding SA 1 France & Merger 31/12/2009 Purchase Equity 40.68% 21.74% 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2010 < thresholds Additional Banking Funding Company SA 1 Belgium 31/12/2010 purchase 31/12/2009 Purchase Equity 33.47% 25.08% Fortis Banque France SA 1 France & Merger 31/12/2010 Prop. 50.00% 37.47% 31/12/2009 Purchase Full 99.98% 74.92% Banque de La Poste SA 1 Belgium 31/12/2009 Purchase Prop. 50.00% 37.47% Additional 31/12/2010 purchase 31/12/2010 Equity 49.99% 37.47% Fortis Gestion Privée 1 France & Merger BCC Corporate 1 Belgium 31/12/2009 Purchase Equity 49.99% 37.46% 31/12/2009 Purchase Full 99.99% 74.91%
(*) French subsidiaries whose regulatory supervision falls within the scope of the consolidated Group, in accordance with article 4.1 of CRBF regulation 2000.03. 1 Allocation of BNP Paribas Fortis and BGL BNP Paribas activities to BNP Paribas Group businesses. 2 Simplifi ed consolidation by the equity method (non-material entities). 3 Entities excluded from prudential scope of consolidation. 4 Entities consolidated under the equity method for prudential purposes.
212 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) 31/12/2010 Equity 2 100.00% 74.93% Banca Nazionale del Lavoro SPA Italy Full 100.00% 100.00% Belgolaise SA 1 Belgium 31/12/2009 Purchase Equity 2 100.00% 74.93% BNL Broker Assicurazioni SPA Italy 31/12/2009 Disposal 31/12/2010 Full 100.00% 74.94% BNL Edizioni SRL Italy 31/12/2009 Merger BNP Paribas Fortis Factor 1 Belgium 31/12/2009 Incorporation Full 100.00% 74.91% BNL Finance SPA Italy Full 100.00% 100.00% 31/12/2010 < thresholds BNL Partecipazioni SPA Italy 31/12/2009 Merger Brand & Licence Company SA 1 Belgium 31/12/2009 Purchase Equity 20.00% 14.99% BNL Positivity SRL Italy Full 51.00% 51.00% 31/12/2010 < thresholds BNP Paribas Personal Finance SPA Italy Full 100.00% 100.00% Certifi mmo V SA 1 Belgium 31/12/2009 Purchase Full 100.00% 74.93% Creaimpresa SPA (Groupe) Italy 31/12/2009 Disposal 31/12/2010 < thresholds International Factors Italia SPA - Ifi talia Italy Full 99.64% 99.64% Comptoir Agricole de Wallonie 1 Belgium 31/12/2009 Purchase Equity 2 100.00% 74.93% Serfactoring SPA Italy Equity 27.00% 26.94% 31/12/2010 < thresholds Special Purpose Entities Credissimo 1 Belgium 31/12/2009 Purchase Equity 2 100.00% 74.93% EMF IT-2008-1 SRL Italy Full 31/12/2010 < thresholds UCB Service SRL Italy Full Credissimo Hainaut SA (ex- La Maison 1 Belgium Sociale de Tournai-Ath SA) 31/12/2009 Purchase Equity 2 99.72% 74.72% Vela ABS Italy Full 31/12/2010 Equity 2 81.66% 61.19% Vela Home SRL Italy Full Crédit pour Habitations Sociales 1 Belgium 31/12/2009 Purchase Equity 2 77.56% 61.19% Vela Mortgages SRL Italy Full 31/12/2010 Equity 2 100.00% 74.93% Vela Public Sector SRL Italy Full Demetris NV 1 Belgium 31/12/2009 Purchase Equity 2 100.00% 74.93% Retail Banking in the United States of America 4 31/12/2010 < thresholds 1897 Services Corporation USA Full 100.00% 100.00% Dikodi BV 1 Netherlands 31/12/2009 Purchase Full 100.00% 74.93% 521 South Seventh Street LLC USA 31/12/2010 Incorporation Full 69.23% 69.23% 31/12/2010 Equity 40.02% 29.88% AmerUS Leasing, Inc. USA 31/12/2009 Dissolution Europay Belgium 1 Belgium 31/12/2009 Purchase Equity 39.80% 29.88% BancWest Corporation USA Full 100.00% 100.00% 31/12/2010 Full 74.93% 74.93% Bancwest Investment Services, Inc. USA Full 100.00% 100.00% Fortis Banque SA 1 Belgium (BNP Paribas Fortis) 31/12/2009 Purchase Full 74.93% 74.93% Bank of the West Business Park Association LLC USA Full 38.00% 38.00% 31/12/2010 Full 100.00% 74.93% Fortis Finance Belgium S.C.R.L. 1 Belgium Bank of the West USA Full 100.00% 100.00% 31/12/2009 Purchase Full 100.00% 74.93% Bishop Street Capital Management USA Full 100.00% 100.00% 31/12/2010 Equity 40.00% 29.97% Corporation FV Holding N.V. 1 Belgium BW Insurance Agency, Inc. USA Full 100.00% 100.00% 31/12/2009 Purchase Equity 40.00% 29.97% BW Leasing, Inc. USA Full 100.00% 100.00% 31/12/2010 < thresholds Het Werkmanshuis NV 1 Belgium Center Club, Inc. USA Full 100.00% 100.00% 31/12/2009 Purchase Equity 41.04% 30.75% CFB Community Development 31/12/2010 Equity 2 100.00% 74.93% Corporation USA Full 100.00% 100.00% Immobilière Sauvenière SA 1 Belgium Partial 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2010 Full 75.90% 63.64% Claas Financial Services LLC USA disposal 31/12/2010 < thresholds 31/12/2009 Full 100.00% 80.45% Isabel SA 1 Belgium 31/12/2009 Purchase Equity 25.33% 18.98% Commercial Federal Affordable Housing, Inc. USA Full 100.00% 100.00% La Propriété Sociale de Binche- 31/12/2010 < thresholds 1 Belgium Commercial Federal Community USA Full 100.00% 100.00% Morlanwelz SA 31/12/2009 Purchase Equity 20.81% 16.10% Development Corporation Commercial Federal Insurance 31/12/2010 < thresholds Corporation USA Full 100.00% 100.00% Landbouwkantoor van Vlaanderen NV 1 Belgium 31/12/2009 Purchase Equity 2 100.00% 74.93% Commercial Federal Investments Services, Inc. USA Full 100.00% 100.00% 31/12/2010 < thresholds Commercial Federal Realty Investors Nieuwe Maatschappij Rond Den 1 Belgium USA Full 100.00% 100.00% Heerd NV 31/12/2009 Purchase Equity 23.26% 17.43% Corporation Commercial Federal Service Corporation USA Full 100.00% 100.00% Société Alsacienne de développement 31/12/2010 Full 100.00% 53.43% 1 France 31/12/2010 Dissolution et d’expansion 31/12/2009 Purchase Full 100.00% 53.43% Community First Insurance, Inc. USA 31/12/2009 Full 100.00% 100.00% 31/12/2010 < thresholds Sowo Investment SA 1 Belgium Community Service, Inc. USA Full 100.00% 100.00% 31/12/2009 Purchase Full 87.50% 65.57% Equity Lending Inc. USA Full 100.00% 100.00% 31/12/2010 < thresholds Visa Belgium SRCL 1 Belgium Essex Credit Corporation USA Full 100.00% 100.00% 31/12/2009 Purchase Equity 24.86% 18.84% FHL Lease Holding Company Inc. USA Full 100.00% 100.00% Special Purpose Entities FHL SPC One, Inc. USA Full 100.00% 100.00% 31/12/2010 Full BASS Master Issuer NV 1 Belgium First Bancorp USA Full 100.00% 100.00% 31/12/2009 Purchase Full First Hawaïan Bank USA Full 100.00% 100.00% 31/12/2010 Full Esmée Master Issuer 1 Belgium First Hawaiian Leasing, Inc. USA Full 100.00% 100.00% 31/12/2009 Incorporation Full First National Bancorporation USA Full 100.00% 100.00% 31/12/2010 Liquidation Park Mountain SME 2007-I BV 1 Netherlands First Santa Clara Corporation USA Full 100.00% 100.00% 31/12/2009 Purchase Full Retail Banking - Italy (BNL Banca Commerciale) FTS Acquisition LLC USA 31/12/2010 Incorporation Full 100.00% 100.00% Glendale Corporate Center Acquisition Artigiancassa SPA Italy Full 73.86% 73.86% LLC USA 31/12/2010 Incorporation Full 50.00% 50.00% Artigiansoa - Org. Di Attestazione SPA Italy Equity 2 80.00% 59.08%
2010 Registration document and fi nancial report - BNP PARIBAS 213 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) 31/12/2010 Dissolution Carrefour Promotora de Vendas e KIC Technology1, Inc. USA Participaçoes (CPVP) Limitada (ex- 31/12/2009 Full 100.00% 100.00% Carrefour Administration Cartos de Brazil Equity 40.00% 40.00% 31/12/2010 Dissolution Creditos - CACC) KIC Technology2, Inc. USA Cetelem Algérie Algeria Full 100.00% 100.00% 31/12/2009 Full 100.00% 100.00% Cetelem America Brazil Full 100.00% 100.00% 31/12/2010 Dissolution KIC Technology3, Inc. USA 31/12/2010 Disposal 31/12/2009 Full 100.00% 100.00% Cetelem Asia Hong Kong 31/12/2009 Full 100.00% 100.00% Laveen Village Center Acquisition LLC USA 31/12/2010 Incorporation Full 58.33% 58.33% 31/12/2010 Merger Liberty Leasing Company USA Full 100.00% 100.00% Cetelem Bank SA (Palier Laser) Poland 31/12/2009 Partial Prop. 50.00% 50.00% Mountain Falls Acquisition Corporation USA Full 100.00% 100.00% disposal 31/12/2010 Full 100.00% 100.00% 31/12/2008 Full 100.00% 100.00% Real Estate Delivery 2 Inc. USA 31/12/2009 Incorporation Full 100.00% 100.00% Cetelem Benelux BV Netherlands Full 100.00% 100.00% Riverwalk Village Three Holdings LLC USA 31/12/2010 Incorporation Full 100.00% 100.00% Cetelem Brésil Brazil Full 100.00% 100.00% Czech Roxborough Acquisition Corporation USA 31/12/2009 Dissolution Cetelem CR Republic Full 100.00% 100.00% Santa Rita Townhomes Acquisition LLC USA 31/12/2010 Incorporation Full 100.00% 100.00% 31/12/2010 Merger Cetelem Holding Participaçoes Limitada Brazil The Bankers Club, Inc. USA Full 100.00% 100.00% 31/12/2009 Full 100.00% 100.00% Ursus Real Estate Inc. USA Full 100.00% 100.00% Cetelem IFN SA Romania Full 100.00% 100.00% Special Purpose Entities 31/12/2010 Full 100.00% 100.00% Cetelem Latin America Holding Brazil 4 Purchase & Participaçoes Ltda 31/12/2009 Incorporation Full 100.00% 100.00% Beacon Hill USA 31/12/2010 Disposal CFB Capital 3 USA 31/12/2009 Dissolution Cetelem Maroc Morocco Full 99.86% 93.27% Partial CFB Capital 4 USA 31/12/2009 Dissolution disposal & Commercial Federal Capital Trust 1 USA 31/12/2009 Dissolution Cetelem Polska Expansion SA (Palier 31/12/2009 Integration LaSer) Poland in the LaSer Commercial Federal Capital Trust 2 USA Full Group Commercial Federal Capital Trust 3 USA Full 31/12/2008 Full 100.00% 100.00% C-One Leasing LLC USA Full 31/12/2010 Disposal Cetelem Processing Services China First Hawaiian Capital 1 USA Full (Shanghai) Ltd. 31/12/2009 Full 100.00% 100.00% BNP Paribas Personal Finance Cetelem Serviços Limitada Brazil Equity 2 100.00% 100.00% 31/12/2010 Full 100.00% 74.93% 31/12/2010 Full 100.00% 100.00% Alpha Crédit SA 1 Belgium 31/12/2009 Purchase Full 100.00% 74.93% Cetelem Servicios SA de CV Mexico Passing 31/12/2009 qualifying Full 100.00% 100.00% Axa Banque Financement France Equity 35.00% 35.00% thresholds Banco BGN SA Brazil Full 100.00% 100.00% Cetelem Slovensko Slovakia Full 100.00% 100.00% Banco BNP Paribas Personal Finance SA Cetelem Thailande Thailand Full 100.00% 100.00% (ex- Banco Cetelem Portugal) Portugal Full 100.00% 100.00% Cetelem UK UK 31/12/2009 < thresholds 31/12/2010 Full 100.00% 100.00% CMV Médiforce (*) France Full 100.00% 100.00% Banco Cetelem Argentina Argentina 31/12/2009 Additional Full 100.00% 100.00% purchase Cofi ca Bail (*) France Full 100.00% 100.00% 31/12/2008 Full 60.00% 60.00% 31/12/2010 Merger Banco Cetelem SA Spain Full 100.00% 100.00% Cofi noga Portugal SGPS Portugal 31/12/2009 Additional Full 100.00% 100.00% 31/12/2010 Merger purchase BGN Holding Financeira Limitada Brazil 31/12/2008 Prop. 50.00% 50.00% 31/12/2009 Full 100.00% 100.00% Cofi parc SNC France Full 100.00% 100.00% 31/12/2010 Full 100.00% 75.00% Cofi plan (*) France Full 99.99% 99.99% Bieffe 5 SPA Italy 31/12/2009 Additional Full 100.00% 75.00% purchase Commerz Finanz GmbH (ex- Dresdner- Germany Full 50.10% 50.10% 31/12/2008 Equity 50.00% 50.00% Cetelem Kreditbank) Credial Italie SPA Italy 31/12/2009 Merger BNP Paribas Personal Finance France Full 100.00% 100.00% 31/12/2010 Merger BNP Paribas Personal Finance EAD Bulgaria Full 100.00% 100.00% Additional 31/12/2010 Disposal Credifi n Banco SA Portugal 31/12/2009 purchase Full 100.00% 100.00% BNP Paribas Personal Finance Belgium Belgium 31/12/2009 Full 100.00% 100.00% 31/12/2008 Prop. 50.00% 50.00% BNP Paribas Personal Finance BV Netherlands Full 100.00% 100.00% 31/12/2010 Full 51.00% 38.25% Additional BNP Paribas Personal Finance SA de CV Mexico Full 100.00% 100.00% Credirama SPA Italy 31/12/2009 purchase Full 51.00% 38.25% 31/12/2010 Full 50.99% 50.78% 31/12/2008 Prop. 50.00% 25.50% Cafi neo (*) France Passing Credisson Holding Ltd. Cyprus Full 100.00% 100.00% 31/12/2009 qualifying Full 50.99% 50.78% thresholds Crédit Moderne Antilles Guyane (*) France Full 100.00% 100.00%
(*) French subsidiaries whose regulatory supervision falls within the scope of the consolidated Group, in accordance with article 4.1 of CRBF regulation 2000.03. 1 Allocation of BNP Paribas Fortis and BGL BNP Paribas activities to BNP Paribas Group businesses. 2 Simplifi ed consolidation by the equity method (non-material entities). 3 Entities excluded from prudential scope of consolidation. 4 Entities consolidated under the equity method for prudential purposes.
214 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) Crédit Moderne Océan Indien (*) France Full 97.81% 97.81% Sundaram Home Finance Ltd. India Prop. 49.90% 49.90% Direct Services Bulgaria Full 100.00% 100.00% Additional TEB Tuketici Finansman AS 31/12/2010 purchase Full 100.00% 87.49% (ex-Palier TEB Mali) Turkey 31/12/2010 Full 55.00% 55.00% 31/12/2009 Prop. 50.00% 50.00% (*) Change of Domofi nance SA France 31/12/2009 control Full 55.00% 55.00% UCB Ingatlanhitel RT Hungary Full 100.00% 100.00% 31/12/2008 Prop. 55.00% 55.00% UCB Suisse Switzerland Full 100.00% 100.00% Effi co Iberia Spain Full 100.00% 100.00% Union de Creditos Inmobiliarios - UCI (Groupe) Spain Prop. 50.00% 50.00% Effi co Portugal Portugal Equity 2 100.00% 100.00% 31/12/2010 Full 100.00% 74.93% Von Essen GmbH & Co. KG Bankge- 1 Germany Effi co France Full 99.96% 99.96% sellschaft 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2010 Equity 49.97% 37.44% Eos Aremas Belgium SA 1 Belgium Debt Investment Funds 31/12/2009 Purchase Equity 49.97% 37.44% 31/12/2010 Dissolution FCC Retail ABS Finance - Noria 2005 France Eurocredito Spain Full 100.00% 100.00% 31/12/2009 Full (*) Facet France Full 100.00% 100.00% FCC Retail ABS Finance - Noria 2008 France Full 31/12/2010 Liquidation 31/12/2010 Full Fideicomiso Financiero Cetelem 1 Argentina FCC Retail ABS Finance - Noria 2009 France 31/12/2009 Incorporation Full 100.00% 100.00% 31/12/2009 Incorporation Full (*) Fidem France Full 51.00% 51.00% FCC Domos 2008 France Full Fidexis Belgium 31/12/2009 Merger FCC Master Domos France Full Fimestic Expansion SA Spain Full 100.00% 100.00% FCC Master Domos 5 France Full 31/12/2010 Full 51.00% 38.22% 4 Finalia 1 Belgium FCC U.C.I 5 -18 Spain Prop. 31/12/2009 Purchase Full 51.00% 38.22% 31/12/2010 Prop. FCC U.C.I 19 Spain 31/12/2010 Full 75.00% 75.00% 31/12/2009 Incorporation Prop. Findomestic Banca SPA Italy 31/12/2009 Additional Full 75.00% 75.00% Fundo de Investimento EM Direitos purchase Creditorios BGN Life Brazil Full 31/12/2008 Prop. 50.00% 50.00% Fundo de Investimento EM Direitos Brazil Full 31/12/2010 Full 100.00% 75.00% Creditorios BGN Premium Phedina Hypotheken 2010 BV Netherlands 31/12/2010 Incorporation Full Findomestic Banka a.d Serbia 31/12/2009 Additional Full 100.00% 75.00% purchase 31/12/2010 Full 31/12/2008 Prop. 50.00% 50.00% Additional Viola Finanza SRL Italy 31/12/2009 purchase Full Fortis Finanz GmbH 1 Germany 31/12/2009 Purchase & Merger 31/12/2008 Prop. Passing Geneve Credit & Leasing SA Switzerland 31/12/2010 qualifying Prop. 51.00% 38.22% Equipment Solutions thresholds Additional 31/12/2010 purchase Full 100.00% 84.48% Gesellschaft fur Capital & Vermogensver- 31/12/2010 < thresholds Ace Equipment Leasing 1 Belgium 1 Germany 31/12/2009 Purchase Full 100.00% 53.43% waltung GmbH 31/12/2009 Purchase Full 100.00% 74.93% Additional 31/12/2010 < thresholds 31/12/2010 purchase Full 100.00% 84.48% Inkasso Kodat GmbH & Co. KG 1 Germany Ace Leasing 1 Belgium 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 Disposal 31/12/2010 Additional Full 100.00% 84.48% KBC Pinto Systems Belgium Ace Leasing BV 1 Netherlands purchase 31/12/2009 Equity 39.99% 39.99% 31/12/2009 Purchase Full 100.00% 53.43% LaSer - Cofi noga (Groupe) France Prop. 50.00% 50.00% 31/12/2010 Additional Full 100.00% 84.48% Loisirs Finance (*) France Full 51.00% 51.00% AFL Lease BV 1 Netherlands purchase 31/12/2009 Purchase Full 100.00% 53.43% Magyar Cetelem Bank Zrt. Hungary Full 100.00% 100.00% 31/12/2010 Additional Full 100.00% 84.48% 31/12/2010 < thresholds Agrilease BV 1 Netherlands purchase Merkur Beteiligungs und Verwaltungsge- 1 Germany sellschaft mit Beschränkter Haftung 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2009 Purchase Full 100.00% 53.43% Additional 31/12/2010 Disposal 31/12/2010 Full 100.00% 84.48% Monabanq France Albury Asset Rentals Ltd. UK purchase 31/12/2009 Equity 34.00% 34.00% 31/12/2009 Purchase Full 100.00% 100.00% Natixis Financement France Equity 33.00% 33.00% Partial All In One Vermietungsgesellschaft für 31/12/2010 disposal Full 100.00% 84.48% Telekommunicationsanlagen mbH. Germany Additional 31/12/2009 Full 100.00% 100.00% 31/12/2010 purchase Full 100.00% 77.32% Nissan Finance Belgium NV 1 Belgium Partial 31/12/2009 Purchase Full 100.00% 69.55% 31/12/2010 Full 100.00% 84.48% All In One Vermietung GmbH Austria disposal Norrsken Finance (*) France Full 51.00% 51.00% 31/12/2009 Full 100.00% 100.00% 31/12/2010 Full 100.00% 100.00% Allstar Business Solutions Ltd. (ex- UK Full 100.00% 100.00% Passing Overdrive Business Solutions Ltd.) Prestacomer SA de CV Mexico 31/12/2009 qualifying Full 100.00% 100.00% Antin Bail 2 (ex- Antin Bail) (*) France Full 100.00% 100.00% thresholds 31/12/2010 Partial Full 51.00% 43.08% 31/12/2008 Equity 100.00% 100.00% Aprolis Finance France disposal Prêts et Services SAS(*) France Full 100.00% 100.00% 31/12/2009 Full 51.00% 51.00% Partial Projeo (*) France Full 51.00% 51.00% 31/12/2010 Full 100.00% 84.48% Arius SA France disposal Servicios Financieros Carrefour EFC Spain Equity 37.28% 39.94% 31/12/2009 Full 100.00% 100.00% Société des Paiement Pass France Equity 39.17% 39.17% 31/12/2010 Partial Full 100.00% 84.48% Submarino Finance Promotora de Credito Artegy Ltd. UK disposal Limitada Brazil Prop. 50.00% 50.00% 31/12/2009 Full 100.00% 100.00%
2010 Registration document and fi nancial report - BNP PARIBAS 215 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) 31/12/2010 Partial Full 100.00% 84.48% 31/12/2010 Partial Full 100.00% 84.48% Artegy SAS France disposal BNP Paribas Lease Group (*) France disposal 31/12/2009 Full 100.00% 100.00% 31/12/2009 Full 100.00% 100.00% Arval Austria GmbH Austria Full 100.00% 100.00% 31/12/2010 Partial Full 100.00% 84.48% BNP Paribas Lease Group (Rentals) Ltd. UK disposal Arval Belgium SA Belgium Full 100.00% 100.00% 31/12/2009 Full 100.00% 100.00% Arval Benelux BV Netherlands Full 100.00% 100.00% Partial 31/12/2010 Full 100.00% 100.00% BNP Paribas Lease Group BV Netherlands 31/12/2010 disposal Full 100.00% 84.48% Passing 31/12/2009 Full 100.00% 100.00% Arval Brasil Limitada Brazil 31/12/2009 qualifying Full 100.00% 100.00% 31/12/2010 Partial Full 100.00% 84.48% thresholds BNP Paribas Lease Group GmbH & Co KG Austria disposal 31/12/2008 Equity 2 100.00% 100.00% 31/12/2009 Full 100.00% 100.00% Arval Business Services Ltd. UK Full 100.00% 100.00% 31/12/2010 Partial Full 100.00% 84.48% BNP Paribas Lease Group KFT Hungary disposal Arval BV Netherlands Full 100.00% 100.00% 31/12/2009 Full 100.00% 100.00% Arval Deutschland GmbH Germany Full 100.00% 100.00% Additional BNP Paribas Lease Group Luxembourg SA 31/12/2010 purchase Full 100.00% 84.47% Arval ECL SAS France Full 100.00% 100.00% (ex- Fortis Lease Luxembourg) 1 Luxembourg 31/12/2009 Purchase Full 100.00% 53.43% Arval Hellas Car Rental SA Greece Equity 2 100.00% 100.00% 31/12/2010 Partial Full 100.00% 84.48% 31/12/2010 Merger BNP Paribas Lease Group Netherlands BV Netherlands disposal Arval Holding France 31/12/2009 Full 100.00% 100.00% 31/12/2009 Full 100.00% 100.00% Partial Arval India Private Ltd. India Equity 2 100.00% 100.00% 31/12/2010 Full 100.00% 84.48% BNP Paribas Lease Group Polska SP z.o.o Poland disposal 4 Arval Ltd. UK Full 100.00% 100.00% 31/12/2009 Full 100.00% 100.00% Arval Luxembourg Luxembourg Full 100.00% 100.00% Partial 31/12/2010 disposal Full 100.00% 84.48% 31/12/2010 Full 100.00% 88.91% BNP Paribas Lease Group RT Hungary 31/12/2009 Full 100.00% 100.00% Passing Arval Maroc Morocco 31/12/2009 qualifying Full 100.00% 88.91% 31/12/2010 Partial Full 100.00% 84.48% thresholds BNP Paribas Lease Group SA Belgium Belgium disposal 31/12/2008 Equity 2 88.73% 88.73% 31/12/2009 Full 100.00% 100.00% Partial Arval NV Belgium Full 100.00% 100.00% 31/12/2010 Full 100.00% 95.94% BNP Paribas Lease Group SPA Italy disposal Arval PHH Holdings Ltd. UK Full 100.00% 100.00% 31/12/2009 Full 100.00% 100.00% Arval PHH Holdings UK Ltd. UK Full 100.00% 100.00% Partial 31/12/2010 disposal Full 100.00% 84.48% Czech BNP Paribas Lease Group PLC UK Arval PHH Service Lease CZ Republic Full 100.00% 100.00% 31/12/2009 Full 100.00% 100.00% 31/12/2010 Full 100.00% 100.00% BNP Paribas Leasing Gmbh Germany 31/12/2009 Merger Passing 31/12/2010 Additional Full 100.00% 84.48% Arval OOO (ex-Arval Russie) Russia 31/12/2009 qualifying Full 100.00% 100.00% CA Motor Finance Ltd. 1 UK purchase thresholds 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2008 Equity 2 100.00% 100.00% 31/12/2010 < thresholds Arval Schweiz AG Switzerland Full 100.00% 100.00% Captive Finance Ltd. 1 Hong Kong 31/12/2009 Purchase Full 100.00% 53.43% Arval Service Lease France Full 100.00% 100.00% 31/12/2010 < thresholds Arval Service Lease Aluger Operational Captive Finance Taiwan Co. Ltd. 1 Taiwan Automoveis Portugal Full 100.00% 100.00% 31/12/2009 Purchase Full 100.00% 53.43% Arval Service Lease Italia S.p.A. Italy Full 100.00% 100.00% 31/12/2010 Partial Full 60.11% 50.78% (*) disposal Arval Service Lease Polska sp. z.o.o. Poland Full 100.00% 100.00% Claas Financial Services France 31/12/2009 Full 60.11% 60.11% Arval Service Lease Romania SRL Romania Equity 2 100.00% 100.00% 31/12/2010 Partial Full 100.00% 50.78% Arval Service Lease SA Spain Full 99.99% 99.99% Claas Financial Services Inc. USA disposal 31/12/2010 Full 100.00% 100.00% 31/12/2009 Full 100.00% 60.11% Passing 31/12/2010 Partial Full 51.00% 43.08% Arval Slovakia Slovakia 31/12/2009 qualifying Full 100.00% 100.00% Claas Financial Services Ltd. UK disposal thresholds 31/12/2009 Full 51.00% 51.00% 31/12/2008 Equity 2 100.00% 100.00% Claas Leasing Gmbh Germany 31/12/2009 Merger Arval Trading France Full 100.00% 100.00% 31/12/2010 Partial Full 50.10% 42.32% (*) disposal Arval UK Group Ltd. UK Full 100.00% 100.00% CNH Capital Europe France 31/12/2009 Full 50.10% 50.10% Arval UK Ltd. UK Full 100.00% 100.00% Passing Passing 31/12/2010 qualifying Full 100.00% 42.32% Autovalley France 31/12/2010 qualifying Equity 2 100.00% 100.00% thresholds CNH Capital Europe BV Netherlands thresholds 31/12/2009 < thresholds 31/12/2010 Partial Equity 50.00% 42.24% Barloword Heftruck BV Netherlands disposal 31/12/2008 Full 100.00% 100.00% 31/12/2009 Equity 50.00% 50.00% BNP Paribas Fleet Holdings Ltd. UK Full 100.00% 100.00%
(*) French subsidiaries whose regulatory supervision falls within the scope of the consolidated Group, in accordance with article 4.1 of CRBF regulation 2000.03. 1 Allocation of BNP Paribas Fortis and BGL BNP Paribas activities to BNP Paribas Group businesses. 2 Simplifi ed consolidation by the equity method (non-material entities). 3 Entities excluded from prudential scope of consolidation. 4 Entities consolidated under the equity method for prudential purposes.
216 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) 31/12/2010 Partial Full 100.00% 42.32% 31/12/2010 < thresholds disposal Fortis Lease (Malaysia) Sdn. Bhd 1 Malaysia CNH Capital Europe GmbH Austria Passing 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2009 qualifying Full 100.00% 50.10% 31/12/2010 Additional Full 100.00% 84.48% thresholds Fortis Lease Car & Truck 1 Belgium purchase Partial 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 disposal Full 100.00% 42.32% CNH Capital Europe Ltd. UK Additional 31/12/2009 Full 100.00% 50.10% Czech 31/12/2010 purchase Full 100.00% 84.48% Fortis Lease Czech 1 Republic 31/12/2010 Partial Full 100.00% 84.48% 31/12/2009 Purchase Full 100.00% 53.43% Commercial Vehicle Finance Ltd. UK disposal 31/12/2010 < thresholds 31/12/2009 Full 100.00% 100.00% Fortis Lease Danmark AS 1 Denmark Dexia Location Longue Durée France Equity 2 51.00% 51.00% 31/12/2009 Purchase Full 100.00% 53.43% Additional Dialcard Fleet Services Ltd. UK Full 100.00% 100.00% 31/12/2010 Full 100.00% 84.48% Fortis Lease Deutschland AG 1 Germany purchase Partial 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 disposal Full 60.00% 50.69% Diamond Finance UK Ltd. UK Purchase & 31/12/2009 Full 60.00% 60.00% Fortis Lease Finland Oy 1 Finland 31/12/2009 Dissolution Cayman 31/12/2010 Dissolution Additional Dreieck One Ltd. 1 31/12/2010 purchase Full 100.00% 84.48% Islands 31/12/2009 Purchase Full 100.00% 53.43% Fortis Lease Group SA 1 Luxembourg 31/12/2009 Purchase Full 100.00% 53.43% Additional 31/12/2010 purchase Full 100.00% 84.16% Additional Elfa Auto 1 Luxembourg 31/12/2010 purchase Full 100.00% 84.48% 31/12/2009 Purchase Full 100.00% 53.43% Fortis Lease Group Services 1 Belgium 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 Partial Full 100.00% 84.48% Equipment Lease BV Netherlands disposal 31/12/2010 < thresholds 4 31/12/2009 Full 100.00% 100.00% Fortis Lease Holding Norge AS 1 Norway 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 Additional Full 100.00% 84.48% ES-Finance 1 Belgium purchase 31/12/2010 < thresholds 31/12/2009 Purchase Full 100.00% 53.43% Fortis Lease Holdings UK Ltd. 1 UK Additional 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 purchase Prop. 50.00% 42.24% Euro-Scribe SAS 1 France 31/12/2010 < thresholds 31/12/2009 Purchase Equity 50.00% 26.71% Fortis Lease Hong Kong Ltd. 1 Hong Kong 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 Additional Full 75.00% 63.36% F.L. Zeebrugge 1 Belgium purchase Additional Fortis Lease Hungaria Equipment 31/12/2010 purchase Equity 2 100.00% 84.48% 31/12/2009 Purchase Full 75.00% 40.07% Financing Financial Leasing Company 1 Hungary 31/12/2009 Purchase Full 100.00% 53.43% Folea Grundstucksverwaltungs und 31/12/2010 Additional Full 85.00% 7.64% Vermietungs GmbH & Co. Objekt 1 Germany purchase 31/12/2010 < thresholds Fortis Lease Hungaria Real estate 1 Hungary Burtenbach KG 31/12/2009 Purchase Full 90.00% 3.21% 31/12/2009 Purchase Full 100.00% 53.43% Folea Grundstucksverwaltungs und 31/12/2010 Additional Equity 2 85.00% 7.64% Additional Vermietungs GmbH & Co. Objekt 1 Germany purchase Fortis Lease Hungaria Vehicle Financing 31/12/2010 purchase Equity 2 100.00% 84.48% Financial Leasing Company 1 Hungary Leverkusen KG 31/12/2009 Purchase Full 90.00% 3.21% 31/12/2009 Purchase Full 100.00% 53.43% Folea Grundstucksverwaltungs und 31/12/2010 < thresholds Additional Vermietungs GmbH & Co. Objekt 1 Germany 31/12/2010 purchase Full 100.00% 82.44% Thalfi ngen 31/12/2009 Purchase Full 100.00% 53.43% Fortis Lease Iberia 1 Spain 31/12/2009 Purchase Full 100.00% 58.01% 31/12/2010 < thresholds Folea Verwaltungs GmbH 1 Germany 31/12/2010 Additional Full 100.00% 84.48% 31/12/2009 Purchase Full 100.00% 53.43% Fortis Lease Immobilier Suisse 1 Switzerland purchase 31/12/2010 < thresholds 31/12/2009 Purchase Full 100.00% 53.43% Folea II Verwaltungs GmbH 1 Germany Additional 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 Full 100.00% 84.48% Fortis Lease Nederland NV 1 Netherlands purchase 31/12/2010 < thresholds 31/12/2009 Purchase Full 100.00% 53.43% Folea III Verwaltungs GmbH 1 Germany 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 Disposal Fortis Lease Norge AS 1 Norway Additional 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 purchase Full 100.00% 84.48% Fortis Energy Leasing XI 1 Netherlands Additional 31/12/2009 Purchase Full 100.00% 53.43% Fortis Lease Operativ Lizing Zartkoruen 31/12/2010 purchase Equity 2 100.00% 84.48% Mukodo Reszvenytarsasag 1 Hungary Additional 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 purchase Full 100.00% 84.48% Fortis Energy Leasing X2 1 Netherlands Additional 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 Full 100.00% 84.48% Fortis Lease Polska Sp.z.o.o. 1 Poland purchase Additional 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 purchase Full 100.00% 84.48% Fortis Energy Leasing X3 BV 1 Netherlands Additional 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 Full 100.00% 84.48% Fortis Lease Portugal 1 Portugal purchase Additional 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 purchase Full 100.00% 84.48% Fortis Energy Leasing XIV BV 1 Netherlands Additional 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 Full 100.00% 84.48% Fortis Lease Romania IFN SA 1 Romania purchase Additional 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 purchase Full 100.00% 84.48% Fortis Finansal Kiralama AS 1 Turkey Additional 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 Full 100.00% 84.48% Fortis Lease S.p.A. 1 Italy purchase 31/12/2010 Additional Full 100.00% 84.48% 31/12/2009 Purchase Full 100.00% 53.43% Fortis Lease 1 Belgium purchase 31/12/2010 < thresholds 31/12/2009 Purchase Full 100.00% 53.43% Fortis Lease Singapore Pte Ltd. 1 Singapore Additional 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 purchase Full 100.00% 84.48% Fortis Lease (China) Co Ltd. 1 China 31/12/2010 Additional Full 100.00% 84.48% 31/12/2009 Purchase Full 100.00% 53.43% Fortis Lease Suisse 1 Switzerland purchase 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 Additional Full 100.00% 84.48% Fortis Lease (France)(*) 1 France purchase 31/12/2009 Purchase Full 100.00% 53.43%
2010 Registration document and fi nancial report - BNP PARIBAS 217 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) 31/12/2010 Disposal 31/12/2010 Additional Full 100.00% 84.48% Fortis Lease Sweden AB 1 Sweden Kota Jaya Ltd. 1 Hong Kong purchase 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2009 Purchase Full 100.00% 53.43% Additional Additional 31/12/2010 purchase Full 100.00% 84.48% 31/12/2010 Full 100.00% 84.48% Fortis Lease UK Ltd. 1 UK Kota Juta Ltd. 1 Hong Kong purchase 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 Additional Full 100.00% 84.48% Partial purchase 31/12/2010 Full 100.00% 95.94% Fortis Lease UK (1) Ltd. 1UK Locatrice Italiana SPA Italy disposal 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2009 Full 100.00% 100.00% Additional Partial 31/12/2010 purchase Full 100.00% 84.48% 31/12/2010 Full 51.00% 43.08% Fortis Lease UK (2) Ltd. 1 UK Manitou Finance Ltd. UK disposal 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2009 Full 51.00% 51.00% 31/12/2010 Additional Full 100.00% 84.48% purchase 31/12/2010 < thresholds Fortis Lease UK (3) Ltd. 1UK Marie Lease SARL 1 Luxembourg 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2009 Purchase Equity 50.00% 26.71% 31/12/2010 Additional Full 100.00% 84.48% 31/12/2010 Partial Full 51.00% 43.08% Fortis Lease UK (4) Ltd. 1UK purchase MFF SAS (*) France disposal 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2009 Full 51.00% 51.00% 31/12/2010 Additional Full 90.00% 76.03% 31/12/2010 Partial Full 100.00% 84.48% Fortis Lease UK (5) Ltd. 1UK purchase Natiobail 2 France disposal 31/12/2009 Purchase Full 90.00% 48.09% 31/12/2009 Full 100.00% 100.00% 31/12/2010 Additional Full 100.00% 84.48% 31/12/2010 Partial Full 100.00% 84.48% Fortis Lease UK Retail Ltd. 1 UK purchase Natiocrédibail (*) France disposal 4 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2009 Full 100.00% 100.00% 31/12/2010 Additional Full 100.00% 84.48% 31/12/2010 Partial Full 100.00% 84.48% Fortis Vastgoedlease BV 1 Netherlands purchase Natiocrédimurs (*) France disposal 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2009 Full 100.00% 100.00% 31/12/2010 Additional Full 100.00% 84.48% 31/12/2010 Partial Full 100.00% 84.48% Friedland Participation et Gestion 1 France purchase Natioénergie (*) France disposal 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2009 Full 100.00% 100.00% Gestion et Location Holding France Full 100.00% 100.00% 31/12/2010 Additional Equity 40.00% 33.79% Otis Vehicle Rentals Ltd. 1 UK purchase 31/12/2010 < thresholds Global Management Services 1 Romania 31/12/2009 Purchase Equity 40.00% 21.37% 31/12/2009 Purchase Full 100.00% 53.43% Overdrive Credit Card Ltd. UK 31/12/2009 Dissolution Greenval Insurance Company Ltd. Ireland Full 4 100.00% 100.00% Purchase & Pad Gas Leasing Monroe LLC 1 USA 31/12/2009 Dissolution 31/12/2010 Partial Full 100.00% 84.48% H.F.G.L Ltd. UK disposal Paricomi (*) France Full 100.00% 100.00% 31/12/2009 Full 100.00% 100.00% PHH Financial services Ltd. UK Full 100.00% 100.00% 31/12/2010 Dissolution Harpur UK Ltd. UK PHH Holdings Ltd. UK 31/12/2009 Dissolution 31/12/2009 Full 100.00% 100.00% PHH Investment Services Ltd. UK Full 100.00% 100.00% Partial Humberclyde Commercial Investments 31/12/2010 disposal Full 100.00% 84.48% PHH Leasing (N° 9) Ltd. UK 31/12/2009 Dissolution Ltd. UK 31/12/2009 Full 100.00% 100.00% PHH Treasury Services Ltd. UK Full 100.00% 100.00% Partial PHH Truck Management Services Ltd. UK 31/12/2009 Dissolution Humberclyde Commercial Investments 31/12/2010 disposal Full 100.00% 84.48% N° 4 Ltd. UK 31/12/2009 Full 100.00% 100.00% Pointeuro Ltd. UK 31/12/2009 Dissolution Partial 31/12/2010 Partial Full 100.00% 84.48% Humberclyde Commercial Investments 31/12/2010 disposal Full 100.00% 84.48% Same Deutz Fahr Finance Ltd. UK disposal N°1 Ltd. UK 31/12/2009 Full 100.00% 100.00% 31/12/2009 Full 100.00% 100.00% Partial 31/12/2010 Partial Full 100.00% 84.48% 31/12/2010 Full 100.00% 84.48% (*) disposal Humberclyde Finance Ltd. UK disposal Same Deutz-Fahr Finance France 31/12/2009 Full 100.00% 100.00% 31/12/2009 Full 100.00% 100.00% Partial Additional 31/12/2010 Full 100.00% 84.48% 31/12/2010 purchase Full 100.00% 84.48% Humberclyde Industrial Finance Ltd. UK disposal SCI Champvernier 1 France 31/12/2009 Full 100.00% 100.00% 31/12/2009 Purchase Full 100.00% 53.43% Partial Additional 31/12/2010 Full 100.00% 84.48% 31/12/2010 purchase Full 100.00% 84.48% Humberclyde Investments Ltd. UK disposal SCI FLIF Azur 1 France 31/12/2009 Full 100.00% 100.00% 31/12/2009 Purchase Full 100.00% 53.43% Partial Additional 31/12/2010 Full 100.00% 42.32% 31/12/2010 purchase Full 100.00% 84.48% JCB Finance (*) France disposal SCI FLIF Château Landon 1 France 31/12/2009 Full 100.00% 50.10% 31/12/2009 Purchase Full 100.00% 53.43% Partial Additional 31/12/2010 Full 50.10% 42.32% 31/12/2010 purchase Full 100.00% 84.48% JCB Finance Holdings Ltd. UK disposal SCI FLIF Evry 2 1 France 31/12/2009 Full 50.10% 50.10% 31/12/2009 Purchase Full 100.00% 53.43%
(*) French subsidiaries whose regulatory supervision falls within the scope of the consolidated Group, in accordance with article 4.1 of CRBF regulation 2000.03. 1 Allocation of BNP Paribas Fortis and BGL BNP Paribas activities to BNP Paribas Group businesses. 2 Simplifi ed consolidation by the equity method (non-material entities). 3 Entities excluded from prudential scope of consolidation. 4 Entities consolidated under the equity method for prudential purposes.
218 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) 31/12/2010 Additional Full 100.00% 84.48% BNP Paribas Martinique (*) France Full 100.00% 100.00% SCI FLIF Le Gallo 1 France purchase 31/12/2010 Disposal 31/12/2009 Purchase Full 100.00% 53.43% BNP Paribas Mauritanie Mauritania 31/12/2010 Dissolution 31/12/2009 Equity 2 59.99% 59.99% SCI FLIF Le Port 1 France (*) 31/12/2009 Purchase Full 100.00% 53.43% BNP Paribas Nouvelle Calédonie France Full 100.00% 100.00% (*) 31/12/2010 Dissolution BNP Paribas Réunion France Full 100.00% 100.00% SCI FLIF Sainte Marie 1 France 31/12/2009 Purchase Full 100.00% 53.43% BNP Paribas SAE (ex- BNP Paribas Egypt) Egypt Full 95.19% 95.19% Partial BNP Paribas Vostok LLC Russia Full 100.00% 100.00% 31/12/2010 disposal Prop. 50.00% 42.24% SREI Equipement Finance Private Ltd. India Dominet Bank Spolka Akcyjna 1 Poland 31/12/2009 Purchase 31/12/2009 Prop. 50.00% 50.00% & Merger Partial 31/12/2010 Disposal 31/12/2010 Full 75.00% 68.73% Dominet Finanse SA 1 Poland disposal 31/12/2009 Purchase Full 100.00% 74.93% TEB Arval Arac Filo Kiralama Turkey Additional 31/12/2009 purchase Full 75.00% 75.00% 31/12/2010 Full 100.00% 74.93% Dominet SA 1 Poland 31/12/2008 Prop. 50.00% 50.00% 31/12/2009 Purchase Full 100.00% 74.93% Additional TEB Finansal Kiralama (ex- Palier 31/12/2010 purchase Full 98.43% 79.19% 31/12/2010 < thresholds TEB Mali) Turkey Dominet SPV-II Sp z.o.o. 1 Poland 31/12/2009 Prop. 42.10% 50.00% 31/12/2009 Purchase Full 100.00% 74.93% The Harpur Group UK Ltd. UK 31/12/2009 Dissolution 31/12/2010 Full 94.11% 70.52% Fortis Bank Anonim Sirketi 1 Turkey Partial 31/12/2009 Purchase Full 94.11% 70.52% 31/12/2010 disposal Full 100.00% 84.48% UFB Asset Finance Ltd. UK 31/12/2010 Full 100.00% 74.93% 31/12/2009 Full 100.00% 100.00% Fortis Bank Malta Ltd. 1 Malta 31/12/2009 Purchase Full 100.00% 70.52% 4 31/12/2010 Dissolution United Care (Cheshire) Ltd. UK 31/12/2010 Full 99.87% 74.84% 31/12/2009 Full 100.00% 100.00% Fortis Bank Polska SA 1 Poland 31/12/2009 Purchase Full 99.87% 74.79% 31/12/2010 Dissolution United Care Group Ltd. UK 31/12/2010 Full 100.00% 74.93% 31/12/2009 Full 100.00% 100.00% Fortis Holding Malta BV 1 Netherlands 31/12/2009 Purchase Full 100.00% 70.52% Special Purpose Entities 31/12/2010 Full 100.00% 74.93% Royale Neuve I Sarl Luxembourg Full Fortis Holding Malta Ltd. 1 Malta 31/12/2009 Purchase Full 100.00% 70.52% Vela Lease SRL Italy Full 31/12/2010 < thresholds Europe Mediterranean Fortis Private Investment Polska 1 Poland 31/12/2009 Purchase Full 100.00% 74.84% 31/12/2010 Dissolution 3D Güvenlik Sistemleri ve Org Tic. AS 1 Turkey Additional 31/12/2009 Purchase Full 99.00% 69.82% 31/12/2010 purchase Equity 2 49.67% 49.68% IC Axa Insurance Ukraine Additional Banque de Nankin China Equity 12.68% 12.68% 31/12/2009 purchase Equity 2 49.67% 40.44% Banque de Wallis et Futuna (*) France Full 50.98% 50.98% 31/12/2008 Purchase Equity 2 49.63% 25.31% Loss of Additional 31/12/2010 control Equity 19.00% 19.00% 31/12/2010 Equity 2 50.00% 50.00% Banque du Sahara LSC Libya IC Axa Ukraine Ukraine purchase 31/12/2009 Full 19.00% 19.00% 31/12/2009 Equity 2 50.00% 40.71% Banque Internationale du Commerce et de l’Industrie Burkina Faso Burkina Faso Full 51.00% 51.00% 31/12/2010 Equity 15.00% 15.00% Banque Internationale du Commerce et Orient Commercial Bank Vietnam Passing de l’Industrie Cote d’Ivoire Ivory Coast Full 59.79% 59.79% 31/12/2009 qualifying Equity 15.00% 15.00% thresholds 31/12/2010 Equity 46.67% 46.67% Partial Banque Internationale du Commerce et Loss of TEB Mali Yatirimlar Anonim Sirketi 31/12/2010 disposal Prop. 50.00% 37.47% Gabon 31/12/2009 Equity 46.67% 46.67% (Groupe) Turkey de l’Industrie Gabon control 31/12/2009 Prop. 50.00% 50.00% 31/12/2008 Full 46.67% 46.67% 31/12/2010 Additional Full 100.00% 100.00% Banque Internationale du Commerce et Guinea Equity 30.83% 30.83% purchase de l’Industrie Guinée Passing Ukrainian Leasing Company Ukraine Banque Internationale du Commerce et Mali Full 85.00% 85.00% 31/12/2009 qualifying Full 100.00% 81.42% de l’Industrie Mali thresholds Banque Internationale du Commerce et 31/12/2008 Purchase Equity 2 100.00% 51.00% de l’Industrie Sénégal Senegal Full 54.11% 54.11% Additional Banque Malgache de l’Océan Indien Madagascar Full 75.00% 75.00% 31/12/2010 purchase Equity 2 99.94% 99.94% Banque Marocaine du Commerce et Morocco Full 66.74% 66.74% Ukrsib Asset Management Ukraine Additional de l’Industrie 31/12/2009 purchase Equity 2 99.94% 81.37% Banque Marocaine du Commerce et de 31/12/2008 Equity 2 99.94% 50.97% l’Industrie Crédit Conso Morocco Full 100.00% 79.74% Banque Marocaine du Commerce et de 31/12/2010 Additional Equity 2 100.00% 99.99% l’Industrie Gestion Morocco Equity 2 100.00% 66.74% purchase Banque Marocaine du Commerce et de Ukrsib Asset Management PI Fund Ukraine 31/12/2009 Additional Equity 2 99.94% 81.37% l’Industrie Leasing Morocco Full 72.03% 48.07% purchase Banque Marocaine du Commerce et de 31/12/2008 Equity 2 99.94% 50.97% l’Industrie Offshore Morocco Full 100.00% 66.74% 31/12/2010 Additional Full 99.99% 99.99% BNP Intercontinentale – BNPI (*) France Full 100.00% 100.00% purchase UkrSibbank Ukraine Additional BNP Paribas BDDI Participations France Full 100.00% 100.00% 31/12/2009 purchase Full 81.42% 81.42% BNP Paribas El Djazair Algeria Full 100.00% 100.00% 31/12/2008 Full 51.00% 51.00% BNP Paribas Fortis Yatirimlar Holding AS Turkey 31/12/2010 Incorporation Full 100.00% 74.93% Union Bancaire pour le Commerce et l’Industrie Tunisia Full 50.00% 50.00% BNP Paribas Guadeloupe (*) France Full 100.00% 100.00% Union Bancaire pour le Commerce et 31/12/2010 Merger BNP Paribas Guyane (*) France Full 100.00% 100.00% Tunisia l’Industrie Leasing 31/12/2009 Full 75.40% 37.70%
2010 Registration document and fi nancial report - BNP PARIBAS 219 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) Investment Solutions Passing Cardif Hayat Sigorta Anonim Sirketi (VIE) Turkey 31/12/2010 qualifying Full 100.00% 100.00% 31/12/2010 Full 65.96% 53.43% thresholds BGL BNP Paribas (ex- BGL) 1 Luxembourg 31/12/2009 Purchase Full 65.96% 53.43% Cardif Holdings Inc. USA Full 4 99.60% 99.60% 31/12/2010 Merger Cardif Insurance Company Russia Equity 2 100.00% 100.00% BNP Paribas Luxembourg SA Luxembourg 31/12/2009 Full 100.00% 100.00% Cardif Leven Belgium Full 4 100.00% 100.00% BNP Paribas Suisse SA Switzerland Full 99.99% 99.99% Cardif Levensverzekeringen NV Netherlands Full 4 100.00% 100.00% 31/12/2010 Full 100.00% 53.43% Cardif Life Insurance Company USA Full 4 100.00% 99.60% Cofhylux SA 1 Luxembourg 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2010 Full 4 85.00% 85.00% Purchase & Cardif Life Insurance Co. Ltd. South Korea 31/12/2009 Additional Full 4 85.00% 85.00% Fortis Intertrust Group Holding (Groupe) 1 Switzerland 31/12/2009 Disposal purchase Reconsoli- 31/12/2008 Prop. 4 50.00% 50.00% Immoparibas Royale-Neuve SA Luxembourg 31/12/2010 dation Full 100.00% 53.43% Cardif Lux International Luxembourg Full 4 100.00% 100.00% 31/12/2010 Additional Full 100.00% 100.00% purchase Cardif Mexico Seguros de Vida SA de CV Mexico Equity 2 100.00% 100.00% IMS ABS FCP France Passing 31/12/2009 qualifying Full 80.74% 80.74% Cardif Mexico Seguros Generales Mexico Equity 2 100.00% 100.00% thresholds SA de CV Insurance Cardif Nordic AB Sweden Full 4 100.00% 100.00% 6 Square Foch SCI France Full 4 100.00% 100.00% Cardif Pinnacle Insurance Holding Ltd. South Africa 31/12/2009 Disposal 8-10 place du Commerce SCI France Full 4 100.00% 100.00% Cardif Pinnacle Insurance Holdings PLC UK Full 4 100.00% 100.00% Cardif Pinnacle Insurance Management 4 14 rue Vivienne SCI France Full 4 100.00% 100.00% Services PLC UK Full 4 100.00% 100.00% 100 rue Lauriston SCI France Full 4 100.00% 100.00% Cardif Polska Towarzystwo Ubezpieczen na Zycie SA Poland Full 4 100.00% 100.00% 104-106 rue Cambronne SCI France Full 4 100.00% 100.00% Cardif Retraite Assurance Vie France Full 4 100.00% 100.00% 31/12/2010 Equity 25.00% 18.73% AG Insurance-Groupe 1 Belgium Cardif Schadeverzekeringen NV Netherlands Full 4 100.00% 100.00% 31/12/2009 Purchase Equity 25.00% 18.73% Cardif Seguros SA Argentina Full 4 100.00% 100.00% Alpha Park SCI France Prop. 4 50.00% 50.00% Cardivida Correduria de Seguros SRL Spain Equity 2 100.00% 100.00% Antin Epargne Pension France 31/12/2010 Purchase Full 4 100.00% 100.00% Carma Grand Horizon SARL France Full 4 100.00% 100.00% Asnieres 1 SCI France Full 4 100.00% 100.00% CB (UK) Ltd. (Fonds C) UK Full 4 100.00% 100.00% Assu-Vie SA France Equity 2 50.00% 50.00% 31/12/2010 Disposal CentroVita Assicurazioni SPA Italy Beausejour SCI France Full 4 100.00% 100.00% 31/12/2009 Prop. 4 49.00% 49.00% BNL Vita SPA Italy Equity 49.00% 49.00% CJS Insurance Company Cardif Ukraine Equity 2 100.00% 100.00% BNP Paribas Assurance France Full 4 100.00% 100.00% Compania de Seguros Generales Chile Full 4 100.00% 100.00% BNP Paribas Assurance BV Netherlands Full 4 100.00% 100.00% Cardif SA Compania de Seguros de Vida Cardif SA Chile Full 4 100.00% 100.00% BNP Paribas Assurance TCB Life Passing Taiwan 31/12/2010 qualifying Equity 49.00% 49.00% Corosa SCI France Full 4 100.00% 100.00% Insurance Company Ltd thresholds Darnell Ltd. Ireland Full 4 100.00% 100.00% BNP Paribas Pierre 2 SCI France Full 4 100.00% 100.00% Defense Etoile SCI France 31/12/2009 Disposal Bobigny Jean Rostand SCI France 31/12/2010 Incorporation Full 4 100.00% 100.00% Defense Vendome SCI France 31/12/2009 Disposal Boulevard Malesherbes SCI France Full 4 100.00% 100.00% Direct Life & Pensions Services Ltd. UK Equity 2 100.00% 100.00% Boulogne Centre SCI France Full 4 100.00% 100.00% Etoile SCI France Full 4 100.00% 100.00% Capital France Hotel SCA France Prop. 4 61.04% 60.14% European Reinsurance Ltd. UK Equity 2 100.00% 100.00% Cardif Assicurazioni SPA Italy Full 4 100.00% 100.00% 31/12/2010 Equity 50.00% 50.00% Cardif Assurances Risques Divers France Full 4 100.00% 100.00% F & B Insurance Holdings SA (Groupe) Belgium 31/12/2009 Incorporation Equity 50.00% 50.00% Cardif Assurance Vie France Full 4 100.00% 100.00% Financial Telemarketing Services Ltd. UK Equity 2 100.00% 100.00% Cardif Biztosito Magyarorszag Zrt Hungary Equity 2 100.00% 100.00% Fonds d’Investissements Immobiliers 31/12/2010 Equity 2 100.00% 100.00% pour le Commerce et la Distribution France Prop. 4 25.00% 25.00% Cardif Colombia Seguros Generales Colombia Passing - Fondis 31/12/2009 qualifying Equity 2 100.00% 100.00% Fortis Emeklilik ve Hayat A.S Turkey 31/12/2010 Purchase Full 100.00% 100.00% thresholds Additional Cardif del Peru Sa Compania de Seguros Perou Equity 2 100.00% 100.00% 31/12/2010 purchase Fortis Epargne Retraite 1 France Cardif do Brasil Vida e Previdencia SA Brazil Full 4 100.00% 100.00% & Merger Passing 31/12/2009 Purchase Full 69.99% 51.45% 31/12/2010 qualifying Full 4 100.00% 100.00% 31/12/2010 Equity 50.00% 26.71% Cardif do Brasil Seguros e Garantias Brazil thresholds Fortis Luxembourg - Vie SA 1 Luxembourg 31/12/2009 Purchase Equity 50.00% 26.71% 31/12/2009 Equity 2 100.00% 100.00% GIE BNP Paribas Assurance France Full 4 100.00% 99.00% Cardif Forsakring AB Sweden Equity 2 100.00% 100.00% Global Euro France Full 4 98.75% 98.75% Hibernia (France) France Prop. 4 61.04% 60.14%
(*) French subsidiaries whose regulatory supervision falls within the scope of the consolidated Group, in accordance with article 4.1 of CRBF regulation 2000.03. 1 Allocation of BNP Paribas Fortis and BGL BNP Paribas activities to BNP Paribas Group businesses. 2 Simplifi ed consolidation by the equity method (non-material entities). 3 Entities excluded from prudential scope of consolidation. 4 Entities consolidated under the equity method for prudential purposes.
220 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) Immeuble Demours SCI France Full 4 100.00% 100.00% BNP Paribas Wealth Management (*) France Full 100.00% 100.00% Passing BNP Paribas Wealth Management 31/12/2010 qualifying Prop. 4 50.00% 50.00% Monaco (*) Monaco Full 100.00% 99.99% Luizaseg Brazil thresholds Conseil Investissement France Full 100.00% 100.00% 31/12/2009 Equity 2 50.00% 50.00% Continuing Care Retirement Community 31/12/2010 Full 99.96% 74.90% Maine 49 SCI (ex- SCI Courbevoie) France Full 4 100.00% 100.00% 1 Belgium NV 31/12/2009 Purchase Full 99.96% 74.90% Maine 50 SCI (ex- SCI Boulogne Nungesser) France Full 4 100.00% 100.00% Purchase Fortis Banque Monaco 1 Monaco 31/12/2009 & Merger Malesherbes Courcelles CIMACO SCI France Full 4 100.00% 100.00% 31/12/2010 Full 100.00% 74.93% Moussorgski SCI France Full 4 100.00% 100.00% Fortis Private Real Estate Holding 1 Luxembourg 31/12/2009 Purchase Full 100.00% 74.93% Natio Assurance France Prop. 4 50.00% 50.00% Fortis Wealth Management Hong 31/12/2010 Full 100.00% 74.93% Natio Fonds Athenes Investissement 5 France Full 4 100.00% 100.00% 1 Hong Kong Kong Ltd. 31/12/2009 Purchase Full 100.00% 74.93% Natio Fonds Collines Investissement 1 France Full 4 100.00% 100.00% Fortis Wealth Management Taiwan 31/12/2010 < thresholds Natio Fonds Collines Investissement 3 France Full 4 100.00% 100.00% 1 Taiwan Co. Ltd. 31/12/2009 Purchase Full 100.00% 74.93% NCVP Participacoes Societarias SA Brazil Full 4 100.00% 100.00% 31/12/2010 Full 100.00% 74.93% Odysee SCI France Full 4 99.90% 99.90% FPRE Management (Belgium) SA 1 Belgium 31/12/2009 Purchase Full 100.00% 74.93% Opera Rendement SCPI France Full 4 99.89% 99.89% 31/12/2010 Merger Passing FPRE Second Résidences SA 1 Belgium Pantin les Moulins SCI France 31/12/2010 qualifying Full 4 99.90% 99.90% 31/12/2009 Purchase Full 100.00% 74.93% thresholds 31/12/2010 Merger Paris Cours de Vincennes SCI France Full 4 100.00% 100.00% FPRE Second Résidences SCA 1 Belgium 4 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2010 Disposal 31/12/2010 Full 100.00% 74.93% Patrimoine Management & Associés France 31/12/2009 Dilution Full 4 58.50% 58.50% Frynaco 1 Belgium 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2008 Full 4 61.50% 61.50% 31/12/2010 Full 100.00% 53.43% Pinnacle Insurance PLC UK Full 4 100.00% 100.00% Fundamentum Asset Management (FAM) 1 Luxembourg 31/12/2009 Purchase Full 100.00% 53.43% Pinnafrica Insurance Company Ltd. South Africa 31/12/2009 Disposal 31/12/2010 Additional Full 100.00% 31.51% Pinnafrica Insurance Life Ltd. South Africa 31/12/2009 Disposal Insinger de Beaufort Asset Management purchase AG Switzerland 31/12/2009 Purchase Full 100.00% 29.54% Pocztylion Arka Powszechne Towarzys- Poland Equity 33.33% 33.33% two Emerytalne SA Additional Czech Insinger de Beaufort Asset Management 31/12/2010 purchase Full 100.00% 63.02% Pojistovna Cardif Pro Vita A.S Full 4 100.00% 100.00% NV Netherlands Republic 31/12/2009 Purchase Full 100.00% 59.08% Pojistovna Cardif Slovakia A.S Slovakia Equity 2 100.00% 100.00% 31/12/2010 Additional Full 100.00% 63.02% Passing Insinger de Beaufort Associates BV Netherlands purchase Porte d’Asnieres SCI France 31/12/2010 qualifying Full 4 99.90% 99.90% thresholds 31/12/2009 Purchase Full 100.00% 59.08% Reumal Investissements SARL France Full 4 100.00% 100.00% 31/12/2010 Additional Full 100.00% 63.02% Insinger de Beaufort Consulting BV Netherlands purchase Rubin SARL Luxembourg Prop. 4 50.00% 50.00% 31/12/2009 Purchase Full 100.00% 59.08% Rue de l’Ouest SCI (ex- SCI Levallois 2) France Full 4 100.00% 100.00% Additional 31/12/2010 purchase Full 100.00% 63.02% Rue Mederic SCI France Full 4 100.00% 100.00% Klein Haneveld Consulting BV Netherlands 31/12/2009 Purchase Full 100.00% 59.08% Rueil Ariane SCI France 31/12/2009 Disposal 31/12/2010 Full 100.00% 74.93% Rueil Caudron SCI France Full 4 100.00% 100.00% Mees Pierson Private Belgian Offi ces NV 1 Belgium 31/12/2009 Purchase Full 100.00% 74.93% State Bank of India Life Insurance Company India Equity 26.00% 26.00% Nachenius, Tjeenk et Co. NV Netherlands 31/12/2009 Merger Suresnes 3 SCI France Full 4 100.00% 100.00% Additional 31/12/2010 purchase Full 50.00% 31.51% Thai Cardif Insurance Life Company Ltd. Thailand Equity 25.00% 25.00% Sodefi Holding AG Switzerland 31/12/2009 Purchase Full 50.00% 29.54% Valtitres France Full 4 100.00% 100.00% Personal Investors Vendome Athenes SCI France Prop. 4 50.00% 50.00% B *Capital (*) France Full 99.96% 99.94% 31/12/2010 Equity 2 88.33% 90.29% Cortal Consors (*) France Full 100.00% 99.98% Warranty Direct Ltd UK Passing 31/12/2009 qualifying Equity 2 90.29% 90.29% Cortal Consors Select France Equity 2 85.00% 84.98% thresholds 31/12/2010 Prop. 33.85% 33.85% Wealth Management Geojit BNP Paribas Financial Services Additional Additional Ltd - Groupe India 31/12/2009 purchase Prop. 34.16% 34.16% 31/12/2010 purchase Full 63.02% 63.02% Bank Insinger de Beaufort NV Netherlands 31/12/2008 Prop. 27.11% 27.11% 31/12/2009 Purchase Full 59.08% 59.08% Additional 31/12/2010 Full 57.00% 57.00% Bank Insinger de Beaufort Safe 31/12/2010 purchase Full 100.00% 63.02% Geojit Technologies Private Ltd. Additional Custody NV Netherlands India 31/12/2009 Full 57.20% 57.20% 31/12/2009 Purchase Full 100.00% 59.08% (ex-palier Geojit) purchase 31/12/2008 Prop. 27.11% 27.11% Bergues Finance Holding Bahamas Full 100.00% 99.99% Portzamparc Gestion France 31/12/2010 Full 100.00% 50.97% BNP Paribas Bahamas Ltd. Bahamas Full 100.00% 99.99% 31/12/2009 Purchase Full 100.00% 50.98% BNP Paribas Espana SA Spain Full 99.59% 99.59% 31/12/2010 Full 51.00% 50.97% BNP Paribas Investment Services LLC USA Full 100.00% 100.00% Portzamparc société de Bourse (*) France 31/12/2009 Purchase Full 51.00% 50.98% BNP Paribas Private Investment Manage- 31/12/2010 Additional Full 100.00% 100.00% ment Ltd. (ex-Fortis Private Investment 1UK purchase Management Ltd.) 31/12/2009 Purchase Full 100.00% 74.93%
2010 Registration document and fi nancial report - BNP PARIBAS 221 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) Investment Partners 31/12/2010 Disposal Artemis Ocean Racing Ltd. 1 UK 31/12/2010 Dissolution 31/12/2009 Purchase Full 100.00% 74.93% ABN AMRO Asset Management 1 Cayman Investments (Asia) Ltd. Islands 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2010 Disposal Artemis Ocean Racing 2 Ltd. 1 UK 31/12/2010 < thresholds 31/12/2009 Purchase Full 100.00% 74.93% ABN AMRO Asset Management Real 1 Cayman Estate (Asia) Islands 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2010 Disposal Artemis Strategic Asset Management 1UK 31/12/2010 < thresholds Ltd. 31/12/2009 Purchase Full 100.00% 74.93% ABN AMRO Asset Management Real 1 Cayman Estate, Korea (Cayman) Islands 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2010 Disposal Artemis Unit Trust Managers Ltd. 1 UK 31/12/2010 < thresholds 31/12/2009 Purchase Full 100.00% 74.93% ABN AMRO Emerging Europe Private 1 Dutch West Equity (Curaçao) Indies 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2010 < thresholds Athymis Gestion SA 1 France Additional 31/12/2009 Purchase Equity 34.00% 24.20% 31/12/2010 purchase Full 100.00% 90.55% ABN Amro Investment Trust Company 1 USA Partial 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2010 disposal Equity 2 49.99% 45.26% Banco Estado Administradora General 31/12/2010 Disposal de Fondos Chile Passing ABN Amro Teda Fund Management 1 China 31/12/2009 qualifying Equity 2 49.99% 49.99% Co. Ltd 31/12/2009 Purchase Equity 49.00% 34.88% thresholds 31/12/2010 Additional Full 100.00% 90.55% Bergère 2009 France 31/12/2009 Merger Alfred Berg Administration A/S 1 Denmark purchase 31/12/2010 Partial Full 100.00% 90.55% 31/12/2009 Purchase Full 100.00% 71.19% BNP Paribas Asset Management France disposal 31/12/2010 Additional Full 100.00% 90.55% 31/12/2009 Full 100.00% 100.00% Alfred Berg Asset Management AB 1 Sweden purchase Partial 4 31/12/2009 Purchase Full 100.00% 71.19% BNP Paribas Asset Management 31/12/2010 disposal Equity 2 100.00% 90.55% Uruguay SA Uruguay Additional 31/12/2009 Equity 2 100.00% 100.00% 31/12/2010 purchase Full 100.00% 90.55% Alfred Berg Kapitalforvaltning Finland AB 1 Finland 31/12/2010 < thresholds 31/12/2009 Purchase Full 100.00% 71.19% BNP Paribas Asset Management Australia Australia Ltd. 31/12/2009 Full 100.00% 100.00% 31/12/2010 Additional Full 100.00% 90.55% Alfred Berg Asset Management Services 1 Sweden purchase Partial BNP Paribas Asset Management 31/12/2010 disposal Full 100.00% 97.57% 31/12/2009 Purchase Full 100.00% 71.19% Brasil Ltda Brazil 31/12/2009 Full 100.00% 100.00% 31/12/2010 Additional Full 100.00% 90.55% Alfred Berg Fonder AB 1 Sweden purchase BNP Paribas Asset Management GmbH Germany 31/12/2009 < thresholds 31/12/2009 Purchase Full 100.00% 71.19% BNP Paribas Asset Management Inc. USA Full 100.00% 100.00% 31/12/2010 Additional Full 100.00% 90.55% Additional Alfred Berg Fondsmaeglerselskab A/S 1 Denmark purchase BNP Paribas Asset Management India 31/12/2010 purchase & < Equity 2 100.00% 90.55% 31/12/2009 Purchase Full 100.00% 71.19% Private Ltd. (ex- Fortis Investment 1 India thresholds Management (India) Ltd.) Additional 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2010 purchase Full 100.00% 90.55% Alfred Berg Forvaltning AS 1 Norway BNP Paribas Asset Management SGIIC Spain Equity 2 100.00% 99.59% 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2010 Additional Full 100.00% 90.55% 31/12/2010 Additional Full 100.00% 90.55% BNP Paribas Clean Energy Partners Ltd. purchase purchase (ex- Fortis Clean Energy Fund GP Ltd.) 1UK Alfred Berg Funds 1 Finland 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2010 Full 100.00% 100.00% 31/12/2010 Additional Full 100.00% 90.55% BNP Paribas Fin’ AMS (*) France Alfred Berg Kapitalförvaltning AB 1 Sweden purchase 31/12/2009 Full 100.00% 100.00% 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2010 Partial Equity 2 100.00% 91.84% Additional BNP Paribas FIN’AMS Asia (ex- BNP disposal 31/12/2010 Full 100.00% 90.55% Paribas Asset Management Asia) Hong Kong Alfred Berg Kapitalforvaltning AS 1 Norway purchase 31/12/2009 Equity 2 100.00% 100.00% 31/12/2009 Purchase Full 100.00% 71.19% Partial 31/12/2010 disposal Full 100.00% 90.55% 31/12/2010 Partial Equity 2 40.00% 36.22% BNP Paribas Investment Partners France Antin Infrastructure Partners France disposal 31/12/2009 Full 100.00% 100.00% 31/12/2009 Equity 2 56.50% 56.50% BNP Paribas Investment Partners Asia Additional 31/12/2010 purchase Full 100.00% 90.55% 31/12/2010 Additional Equity 30.00% 27.16% Ltd. (ex- ABN AMRO Asset Management 1 Hong Kong Aramea Asset Management AG 1 Germany purchase (Asia) Ltd.) 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2009 Purchase Equity 30.00% 21.36% BNP Paribas Investment Partners Additional 31/12/2010 purchase Full 100.00% 90.55% Arnhem Investment Management Pty 31/12/2010 Additional Equity 40.00% 36.22% (Australia) Ltd. (ex- Fortis Investment 1 Australia Ltd. (ex- Fortis Investment Partners 1 Australia purchase Management Australia Ltd.) 31/12/2009 Purchase Full 100.00% 71.19% Pty Ltd.) 31/12/2009 Purchase Equity 40.00% 28.48% BNP Paribas Investment Partners 31/12/2010 Additional Full 100.00% 90.55% 31/12/2010 Disposal (Australia) Pty Ltd. (ex- Fortis Investment 1 Australia purchase Artemis Asset Management Ltd. 1 UK Management Australia Holdings Pty Ltd.) 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2009 Purchase Full 100.00% 74.93% BNP Paribas Investment Partners Additional 31/12/2010 Disposal 31/12/2010 purchase Full 100.00% 90.55% Artemis Fund Managers Ltd. 1 UK BE Holding (ex- Fortis Investment 1 Belgium 31/12/2009 Purchase Full 100.00% 74.93% Management SA) 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2010 Disposal BNP Paribas Investment Partners 31/12/2010 Additional Full 100.00% 90.55% Artemis Investment Management Ltd. 1 UK Belgium (ex- Fortis Investment Manage- 1 Belgium purchase 31/12/2009 Purchase Full 100.00% 74.93% ment Belgium) 31/12/2009 Purchase Full 100.00% 71.19%
(*) French subsidiaries whose regulatory supervision falls within the scope of the consolidated Group, in accordance with article 4.1 of CRBF regulation 2000.03. 1 Allocation of BNP Paribas Fortis and BGL BNP Paribas activities to BNP Paribas Group businesses. 2 Simplifi ed consolidation by the equity method (non-material entities). 3 Entities excluded from prudential scope of consolidation. 4 Entities consolidated under the equity method for prudential purposes.
222 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) 31/12/2010 Partial Equity 2 100.00% 90.59% 31/12/2010 Additional Full 100.00% 79.22% BNP Paribas Investment Partners BSC disposal Fauchier Partners Ltd. (ex-palier Fauchier) UK purchase (ex- BNP Paribas Asset Management Bahrain Passing 31/12/2009 Prop. 47.61% 75.00% BSC) 31/12/2009 qualifying Equity 2 99.58% 99.58% thresholds Additional 31/12/2010 purchase Full 83.39% 66.06% BNP Paribas Investment Partners Canada 31/12/2010 < thresholds Fauchier Partners LLP (ex-palier Fauchier) UK Ltd. (ex- Fortis Investment Management 1 Canada 31/12/2009 Prop. 39.70% 62.54% Canada Ltd.) 31/12/2009 Purchase Full 100.00% 71.19% Additional Additional Fauchier Partners Management Company 31/12/2010 purchase Full 100.00% 79.22% BNP Paribas Investment Partners 31/12/2010 Full 100.00% 90.55% Ltd. (ex-palier Fauchier) UK Funds (Nederland) NV (ex- Fortis Funds 1 Netherlands purchase 31/12/2009 Prop. 47.61% 75.00% (Nederland) NV) 31/12/2009 Purchase Full 100.00% 71.19% Additional Partial Fauchier Partners Management Ltd. 31/12/2010 purchase Full 87.49% 79.22% BNP Paribas Investment Partners Japan 31/12/2010 Full 100.00% 90.55% (ex-palier Fauchier) UK Ltd. (ex- BNP Paribas Asset Management Japan disposal 31/12/2009 Prop. 47.61% 75.00% Japan Ltd.) 31/12/2009 Full 100.00% 100.00% 31/12/2010 Additional Full 100.00% 90.55% BNP Paribas Investment Partners 31/12/2010 Partial Full 99.66% 90.24% Fimapierre 1 France purchase Luxembourg SA (ex- BNP Paribas Asset Luxembourg disposal 31/12/2009 Purchase Full 100.00% 71.19% Management Luxembourg) 31/12/2009 Full 99.66% 99.66% Fischer Francis Trees & Watts Inc. USA Full 100.00% 100.00% BNP Paribas Investment Partners Additional 31/12/2010 purchase Full 100.00% 90.55% 31/12/2010 Dissolution Netherlands NV (ex- Fortis Investment 1 Netherlands Fischer Francis Trees & Watts Kabushiki Japan Management Netherlands NV) 31/12/2009 Purchase Full 100.00% 71.19% Kaisha 31/12/2009 Full 100.00% 100.00% BNP Paribas Investment Partners NL 31/12/2010 Additional Full 100.00% 90.55% Fischer Francis Trees & Watts Ltd. UK Full 100.00% 100.00% Holding NV (ex- Fortis Investment NL 1 Netherlands purchase Holding NV) 31/12/2010 Merger 31/12/2009 Purchase Full 100.00% 71.19% Fischer Francis Trees & Watts Pte Ltd. Singapore BNP Paribas Investment Partners 31/12/2010 < thresholds 31/12/2009 Full 100.00% 100.00% (Suisse) SA (ex- Fortis Investment 1 Switzerland Additional 4 Management (Schweiz) A.G.) 31/12/2009 Purchase Full 100.00% 71.19% Fischer Francis Trees & Watts Singapore 31/12/2010 purchase & Equity 2 100.00% 90.55% BNP Paribas Investment Partners Partial Ltd. (ex- ABN AMRO Asset Management 1 Singapore < thresholds 31/12/2010 Equity 2 100.00% 90.55% (Singapore) Ltd.) Singapore Ltd. (ex- BNP Paribas Asset Singapore disposal 31/12/2009 Purchase Full 100.00% 71.19% Management Singapore Ltd.) 31/12/2009 Equity 2 100.00% 100.00% Fischer Francis Trees & Watts UK UK Full 100.00% 100.00% BNP Paribas Investment Partners Partial Societa di Gestione del Risparmio SPA 31/12/2010 disposal Full 100.00% 98.42% Additional Italy Fischer Francis Trees & Watts UK Ltd. (ex- 31/12/2010 purchase Full 100.00% 90.55% (ex- BNP Paribas Asset Management Fortis Investment Management UK Ltd.) 1UK SGR Milan) 31/12/2009 Full 100.00% 100.00% 31/12/2009 Purchase Full 100.00% 71.19% BNP Paribas Investment Partners Taiwan 31/12/2010 < thresholds 31/12/2010 Dissolution Co. Ltd. (ex- Fortis Sec Investment 1 Taiwan Flexifund Associates 1 Luxembourg Consultant Co. Ltd.) 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2009 Purchase Full 100.00% 71.19% Additional BNP Paribas Investment Partners UK 31/12/2010 Full 100.00% 90.55% 31/12/2010 Merger Holdings Ltd. (ex- Fortis Investment 1UK purchase Fortis Asset Management Japan CO Ltd. 1 Japan Management Holdings UK Ltd.) 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2009 Purchase Full 100.00% 71.19% BNP Paribas Investment Partners UK Ltd. Partial 31/12/2010 Merger 31/12/2010 disposal Full 100.00% 90.55% Fortis Bank Suisse SA 1 Switzerland (ex- BNP Paribas Asset Management UK 31/12/2009 Purchase Full 100.00% 53.43% UK Ltd.) 31/12/2009 Full 100.00% 100.00% 31/12/2010 Merger Passing Fortis Gesbeta SGIIC 1 Spain 31/12/2010 qualifying Full 100.00% 100.00% 31/12/2009 Purchase Full 100.00% 74.93% BNP Paribas Private Equity France thresholds Additional 31/12/2009 Equity 2 100.00% 100.00% Fortis Gestao de Investimentos Brasil 31/12/2010 purchase Full 100.00% 90.55% Limitada 1 Brazil Purchase & 31/12/2009 Purchase Full 100.00% 71.19% Cadogan Associates LLC 1 USA 31/12/2009 Disposal Purchase & 31/12/2010 Additional Full 100.00% 90.55% Cadogan Management (UK) Ltd. 1 UK 31/12/2009 Disposal Fortis Investment Finance 1 France purchase 31/12/2009 Purchase Full 100.00% 71.19% Cadogan Management LLC 1 USA 31/12/2009 Purchase & Disposal Purchase & Partial Fortis Investments Japan Holding Ltd. 1 Japan 31/12/2009 dissolution 31/12/2010 disposal Full 100.00% 90.55% CamGestion France Fortis Investment Management Cayman 31/12/2010 Liquidation 31/12/2009 Full 100.00% 100.00% 1 (Cayman) Ltd. Islands 31/12/2009 Purchase Full 99.99% 71.19% Cardif Gestion d’Actifs France 31/12/2009 Merger 31/12/2010 Additional Full 100.00% 90.55% Charter Atlantic Capital corporation USA Full 100.00% 100.00% Fortis Investment Management Chile SA 1 Chile purchase Charter Atlantic Corporation USA Full 100.00% 100.00% 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2010 Additional Full 100.00% 90.55% EISER Infrastructure Capital Manage- 31/12/2010 Disposal Fortis Investment Management purchase 1UK Argentina Soc. Gerente de FCI SA 1 Argentina ment Ltd. 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2010 Additional Full 100.00% 79.22% 31/12/2010 Merger purchase Fortis Investment Management France 1 France Fauchier General Partners Ltd UK Additional 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2009 purchase Prop. 47.61% 75.00% Fortis Investment Management Hong 31/12/2010 Liquidation 31/12/2008 Prop. 42.17% 62.50% 1 Hong Kong Kong Ltd. 31/12/2009 Purchase Full 100.00% 71.19% Additional Fauchier Partners Asset Management Ltd 31/12/2010 purchase Full 100.00% 79.22% 31/12/2010 Merger (ex- palier Fauchier) UK Fortis Investment Management 1 Luxembourg 31/12/2009 Prop. 47.61% 75.00% Luxembourg SA 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2010 Additional Full 100.00% 79.22% Additional Fauchier Partners Corporation (ex-palier purchase 31/12/2010 purchase Full 100.00% 90.55% Fauchier) USA Fortis Investment Management USA Inc. 1 USA 31/12/2009 Prop. 47.61% 75.00% 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2010 Additional Full 100.00% 79.22% Purchase & Fauchier Partners International Ltd purchase Fortis Liquidity High Grade USD 1 Luxembourg 31/12/2009 Disposal (ex-palier Fauchier) Bermuda 31/12/2009 Prop. 47.61% 75.00% 31/12/2010 Additional Full 100.00% 90.55% Fortis Portfoy Yonetimi AS 1 Turkey purchase 31/12/2009 Purchase Full 100.00% 71.19%
2010 Registration document and fi nancial report - BNP PARIBAS 223 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) Passing Additional Fund Channel SA Luxembourg 31/12/2010 qualifying Equity 2 49.96% 45.24% PT. BNP Paribas Investment Partners 31/12/2010 purchase Full 99.00% 89.64% (ex- PT Fortis Investments) 1 Indonesia thresholds 31/12/2009 Purchase Full 99.00% 70.47% Partial 31/12/2010 disposal Full 100.00% 90.55% Partial FundQuest France 31/12/2010 disposal Equity 25.00% 22.64% 31/12/2009 Full 100.00% 100.00% SAIB BNP Paribas Asset Management Cy Ltd. Saudi Arabia Passing Partial 31/12/2009 qualifying Equity 25.00% 25.00% 31/12/2010 disposal Equity 2 100.00% 90.55% thresholds FundQuest Holdings Ltd. UK Passing Partial 31/12/2009 qualifying Equity 2 100.00% 100.00% Shenying & Wanguo BNP Paribas Asset 31/12/2010 disposal Equity 33.00% 29.88% Management Company Ltd. China thresholds 31/12/2009 Equity 33.00% 33.00% FundQuest Inc. USA Full 100.00% 100.00% Partial Partial 31/12/2010 disposal Prop. 35.00% 31.69% 31/12/2010 Equity 2 100.00% 90.55% Shinan BNP Paribas Asset Management disposal South Korea 31/12/2009 Dilution Prop. 35.00% 35.00% FundQuest MM Ltd. UK Passing Co. Ltd 31/12/2009 qualifying Equity 2 100.00% 100.00% 31/12/2008 Prop. 50.00% 50.00% thresholds Sundaram BNP Paribas Asset Manage- 31/12/2010 Disposal 31/12/2010 Partial Equity 2 100.00% 90.55% India disposal ment Company Ltd. 31/12/2009 Equity 49.90% 49.90% FundQuest UK Ltd. UK Passing TFunds Mutual Fund Management Additional 31/12/2009 qualifying Equity 2 100.00% 100.00% Company SA (ex- ASPIS 31/12/2010 purchase Equity 45.00% 40.75% thresholds International Mutual Funds Management 1 Greece 31/12/2009 Purchase Equity 45.00% 32.03% 31/12/2010 Partial Full 100.00% 93.26% Co.) disposal TKB BNP Paribas Investment Partners Additional Gestion Obligataire Diversifi ée France Passing Holding BV 31/12/2010 purchase Equity 50.00% 45.27% 31/12/2009 qualifying Full 100.00% 100.00% (ex- KIT Fortis Investment Management 1 Netherlands 4 thresholds Holding BV) 31/12/2009 Purchase Equity 50.00% 35.60% Additional Additional 31/12/2010 purchase Full 100.00% 90.55% TKB BNP Paribas Investment 31/12/2010 Equity 50.00% 45.27% Groeivermogen NV 1 Netherlands Partners, Jsc (ex- KIT Fortis Investment 1 Russia purchase 31/12/2009 Purchase Full 100.00% 71.19% Management) 31/12/2009 Purchase Equity 50.00% 35.60% Additional 31/12/2010 Equity 33.00% 29.88% TKB BNP Paribas Investment Additional Haitong - Fortis Private Equity Fund purchase 31/12/2010 purchase Equity 50.00% 45.27% Management Co. Ltd. 1 China Partners LLC (ex- KIT Fortis Investment 1 Russia 31/12/2009 Purchase Equity 33.00% 23.49% Management Consulting LLC) 31/12/2009 Purchase Equity 50.00% 35.60% HFT Investment Management Co. Ltd. Additional Additional 31/12/2010 purchase Equity 49.00% 44.37% 31/12/2010 Equity 25.00% 22.64% (ex- Fortis Haitong Invest Managt Co. 1 China Versiko AG 1 Germany purchase Ltd.) - Groupe 31/12/2009 Purchase Equity 49.00% 34.88% 31/12/2009 Purchase Equity 25.10% 17.87% HFT Investment Management (HK) Ltd. 1 Hong Kong 31/12/2010 Incorporation Equity 49.00% 44.37% Securities Services 31/12/2010 Partial Equity 27.88% 25.24% BNP Paribas Fund Services Australasia Impax Asset Management Group PLC disposal Ltd. Australia Full 100.00% 100.00% (ex- Impax Group PLC) UK 31/12/2009 Equity 27.88% 27.88% BNP Paribas Fund Services Dublin Ltd. Ireland Full 100.00% 100.00% Additional Industrifi nans Forskningsparken 31/12/2010 purchase Full 100.00% 90.55% BNP Paribas Fund Services France France Full 100.00% 100.00% Eiendom AS 1 Norway 31/12/2009 Purchase Full 100.00% 71.19% BNP Paribas Fund Services Holdings UK 31/12/2009 < thresholds Additional BNP Paribas Fund Services UK Ltd. UK 31/12/2009 < thresholds 31/12/2010 purchase Equity 50.00% 45.27% KIT Fortis Investment Management 1 Kazakhstan BNP Paribas Securities Services - BP2S (*) France Full 100.00% 100.00% 31/12/2009 Purchase Equity 50.00% 35.60% Passing Malbec Partners Inc. USA Full 100.00% 100.00% BNP Paribas Securities Services Fund Jersey 31/12/2010 qualifying Equity 2 100.00% 100.00% Administration Ltd. thresholds 31/12/2010 Dissolution Malbec Partners LLP UK BNP Paribas Securities Services Custody Jersey 31/12/2009 < thresholds 31/12/2009 Full 100.00% 100.00% bank Ltd BNP Paribas Securities Services 31/12/2010 Dissolution Jersey Full 100.00% 100.00% Malbec UK Ltd. UK (Holdings) Ltd. 31/12/2009 Full 100.00% 100.00% BNP Paribas Trust Company (Guernesey) Ltd. Guernsey Equity 2 100.00% 100.00% Additional 31/12/2010 purchase Full 100.00% 90.55% 31/12/2010 Dissolution Merconter SA 1 Argentina F.A.M. Fund Advisory 1 Luxembourg 31/12/2009 Purchase Full 100.00% 71.19% 31/12/2009 Purchase Full 100.00% 53.43% Cayman 31/12/2010 < thresholds 31/12/2010 Equity 47.84% 25.56% Ostara Partners Inc. 1 Fastnet Nederland 1 Netherlands Islands 31/12/2009 Purchase Equity 50.00% 35.82% 31/12/2009 Purchase Equity 47.84% 25.55% Cayman 31/12/2010 < thresholds 31/12/2010 Equity 47.80% 25.54% Ostara Partners Inc. Korea 1 Fund Administration Services & 1 Belgium Islands 31/12/2009 Purchase Equity 50.00% 35.82% Technology Network Belgium 31/12/2009 Purchase Equity 47.80% 25.53% Partial 31/12/2010 Disposal 31/12/2010 disposal Equity 2 100.00% 90.55% Fund Administration Services & Technology Network Luxembourg 1 Luxembourg Overlay Asset Management France 31/12/2009 < thresholds Equity 2 100.00% 100.00% 31/12/2009 Purchase Equity 47.79% 25.53% 31/12/2008 Full 100.00% 100.00% Real Estate Services Purchase 31/12/2010 < thresholds Equity 2 84.99% 76.96% Aberdeen Property Investors Belgium Belgium 31/12/2009 PT ABN AMRO Manajemen Investasi 1 Indonesia & Merger 31/12/2009 Purchase Full 84.99% 60.50% Asset Partenaires France Full 100.00% 96.77%
(*) French subsidiaries whose regulatory supervision falls within the scope of the consolidated Group, in accordance with article 4.1 of CRBF regulation 2000.03. 1 Allocation of BNP Paribas Fortis and BGL BNP Paribas activities to BNP Paribas Group businesses. 2 Simplifi ed consolidation by the equity method (non-material entities). 3 Entities excluded from prudential scope of consolidation. 4 Entities consolidated under the equity method for prudential purposes.
224 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) 31/12/2010 Full 100.00% 100.00% BNP Paribas Real Estate Project Germany Full 100.00% 100.00% Auguste Thouard Expertise France Solutions GmbH 31/12/2009 Incorporation Full 100.00% 100.00% BNP Paribas Real Estate Property Developpement Italy SPA Italy Full 100.00% 100.00% BNP Paribas Immobilier Promotion France Full 100.00% 100.00% Immobilier d’Entreprise BNP Paribas Real Estate Property Belgium Full 100.00% 100.00% BNP Paribas Immobilier Résidentiel France Full 100.00% 100.00% Management Belgium BNP Paribas Real Estate Property BNP Paribas Immobilier Résidentiel Management France SAS France Full 100.00% 100.00% Promotion Île de France France Full 100.00% 100.00% BNP Paribas Real Estate Property Germany Full 100.00% 100.00% BNP Paribas Immobilier Résidentiel France Full 100.00% 100.00% Management GmbH Promotion Méditerranée BNP Paribas Real Estate Property BNP Paribas Immobilier Résidentiel Management International France Full 100.00% 100.00% Promotion Rhône Alpes France Full 100.00% 100.00% BNP Paribas Real Estate Property Italy Full 100.00% 100.00% BNP Paribas Immobilier Résidentiel France Full 100.00% 100.00% Management Italy SrL Promotion Sud Ouest BNP Paribas Real Estate Property BNP Paribas Immobilier Résidentiel Management Spain SA Spain Full 100.00% 100.00% Promotion Var France Full 100.00% 100.00% BNP Paribas Real Estate Services Italy 31/12/2010 Incorporation Full 100.00% 100.00% BNP Paribas Immobilier Résidentiel France Full 100.00% 100.00% Holding Italy Résidences Services BNP Paribas Real Estate Transaction BNP Paribas Immobilier Résidentiel France France Full 95.91% 95.91% Résidences Services BSA France Full 100.00% 100.00% BNP Paribas Real Estate Valuation France France Full 100.00% 100.00% BNP Paribas Immobilier Résidentiel France Full 100.00% 100.00% Résidences Services Sofi ane BRSI SAS France 31/12/2009 Disposal BNP Paribas Immobilier Résidentiel Service Clients France Full 100.00% 100.00% Cabinet Claude Sanchez France 31/12/2009 Disposal BNP Paribas Immobilier Résidentiel Cristolienne de Participations SAS France Full 100.00% 100.00% Transaction & Conseil France Full 100.00% 100.00% BNP Paribas Immobilier Résidentiel V2i France Full 100.00% 100.00% F G Ingenierie et Promotion Immobilière France Full 100.00% 100.00% 4 Additional BNP Paribas Real Estate France Full 100.00% 100.00% Fortis Direct Real Estate 31/12/2010 purchase Full 100.00% 100.00% Management 1 Luxembourg BNP Paribas Real Estate Advisory 31/12/2009 Purchase Full 100.00% 74.93% Belgium SA Belgium Full 100.00% 100.00% BNP Paribas Real Estate Advisory 31/12/2010 Disposal Italy Full 100.00% 100.00% Gerer SA France Italy SPA 31/12/2009 Full 100.00% 100.00% BNP PB Real Estate Advisory & Property Management Ireland Ltd. Ireland Full 100.00% 100.00% Immobilière des Bergues France Full 100.00% 100.00% BNP Paribas Real Estate Advisory & 31/12/2010 Merger 31/12/2010 < thresholds Property Management International France Euro Fashion Center SA 1 Belgium 31/12/2009 Full 100.00% 100.00% 31/12/2009 Purchase Full 100.00% 74.93% BNP Paribas Real Estate Advisory & United Arab 31/12/2010 Full 49.00% 49.00% 31/12/2010 < thresholds Property Management LLC Emirates Fortis / KFH Scof Advisor Ltd. 1 Virgin Islands 31/12/2009 Incorporation Full 49.00% 49.00% 31/12/2009 Purchase Equity 50.00% 37.47% BNP Paribas Real Estate Advisory & Luxembourg Full 100.00% 100.00% 31/12/2010 < thresholds Property Management Luxembourg SA Lot 2 Porte d’Asnières SNC France BNP Paribas Real Estate Advisory & 31/12/2009 Full 100.00% 100.00% Property Management UK Ltd. UK Full 100.00% 100.00% Meunier Hispania SA Spain Full 100.00% 100.00% BNP Paribas Real Estate Advisory Spain Full 100.00% 100.00% Spain SA 31/12/2010 < thresholds Multi Vest (France) 4 SAS France BNP Paribas Real Estate Advisory 31/12/2010 < thresholds 31/12/2009 Full 100.00% 100.00% USA Inc. USA 31/12/2009 Full 100.00% 100.00% Newport Management SAS France Full 100.00% 100.00% BNP Paribas Real Estate Consult France France Full 100.00% 100.00% Partner’s & Services France Full 100.00% 100.00% BNP Paribas Real Estate Consult GmbH Germany Full 100.00% 100.00% 31/12/2010 Full 100.00% 100.00% BNP Paribas Real Estate Facilities UK Full 100.00% 100.00% Pyrotex SARL Luxembourg Passing Management Ltd. 31/12/2009 qualifying Full 100.00% 100.00% BNP Paribas Real Estate Financial thresholds Partner (ex- BNP Paribas Participations France Full 100.00% 100.00% Financières Immobilières) 31/12/2010 Full 88.00% 88.00% S.C BNP Paribas Real Estate Advisory S.A. Romania BNP Paribas Real Estate GmbH Germany Full 100.00% 100.00% 31/12/2009 Purchase Full 88.00% 88.00% BNP Paribas Real Estate Holding Sesame Conseil SAS France 31/12/2010 Purchase Full 95.25% 95.25% Benelux SA Belgium Full 100.00% 100.00% BNP Paribas Real Estate Holding GmbH Germany Full 100.00% 100.00% Tasaciones Hipotecarias SA Spain Full 100.00% 100.00% BNP Paribas Real Estate Hotels France France Full 96.01% 96.01% 31/12/2010 Full 100.00% 100.00% Via Crespi 26 SRL Italy Passing 31/12/2010 Full 55.00% 55.00% 31/12/2009 qualifying Full 100.00% 100.00% BNP Paribas Real Estate & Infrastructure India Advisory Service Private Ltd. 31/12/2009 Purchase Full 55.00% 55.00% thresholds Weatheralls Consultancy Services Ltd. UK Full 100.00% 100.00% BNP Paribas Real Estate France Full 96.77% 96.77% Investment Management Corporate and Investment Banking BNP Paribas Real Estate Belgium 31/12/2010 Incorporation Full 100.00% 100.00% Investment Management Belgium France BNP Paribas Real Estate Investment Management Italy Italy Full 100.00% 100.00% BNP Paribas Arbitrage (*) France Full 100.00% 100.00% BNP Paribas Real Estate BNP Paribas Equities France (*) France Full 99.96% 99.96% Investment Management Ltd. UK Full 100.00% 100.00% BNP Paribas Equity Strategies France Full 100.00% 100.00% BNP Paribas Real Estate Investment Luxembourg 31/12/2010 Incorporation Full 100.00% 100.00% Management Luxembourg SA BNP Paribas Stratégies Actions France Full 100.00% 100.00% BNP Paribas Real Estate Investment Management UK Ltd. UK Full 100.00% 100.00% Capstar Partners SAS France France 31/12/2009 Merger BNP Paribas Real Estate Investment Services SAS France Full 100.00% 100.00% Esomet SAS France Full 100.00% 100.00% 31/12/2010 Full 100.00% 100.00% Harewood Asset Management France Full 100.00% 100.00% BNP Paribas Real Estate Jersey Ltd. Jersey 31/12/2009 Purchase Full 100.00% 100.00%
2010 Registration document and fi nancial report - BNP PARIBAS 225 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) 31/12/2010 Full 100.00% 100.00% Additional Fortis International Finance Luxembourg 31/12/2010 purchase Full 100.00% 100.00% Laffi tte Participation 22 France Passing SARL 1 Luxembourg 31/12/2009 qualifying Full 100.00% 100.00% 31/12/2009 Purchase Full 100.00% 74.93% thresholds 31/12/2010 < thresholds Paribas Dérivés Garantis SNC France Full 3 100.00% 100.00% Fortis Park Lane Ireland Ltd. 1 Ireland 31/12/2009 Purchase Full 100.00% 74.93% Parifergie (*) France Full 100.00% 100.00% 31/12/2010 < thresholds Parilease SAS (*) France Full 100.00% 100.00% Fortis PF Investments (UK) Ltd. 1 UK 31/12/2009 Purchase Full 100.00% 74.93% Taitbout Participation 3 SNC France Full 100.00% 100.00% 31/12/2010 Full 100.00% 74.93% Europe Fortis Proprietary Investment Ireland Ltd. 1 Ireland 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2010 Full 100.00% 53.43% Alleray 1 Luxembourg 31/12/2010 < thresholds Equity 2 100.00% 70.52% 31/12/2009 Purchase Full 100.00% 53.43% Fortis Yatirim Menkul Degerler AS 1 Turkey 31/12/2009 Purchase Full 100.00% 70.52% 31/12/2010 < thresholds Argance 1 Luxembourg 31/12/2010 Full 100.00% 74.93% 31/12/2009 Purchase Full 100.00% 53.43% G I Finance 1 Ireland 31/12/2009 Purchase Full 100.00% 74.93% BNP Paribas Ireland Ireland Full 100.00% 100.00% Harewood Holdings Ltd. UK Full 100.00% 100.00% BNP Paribas Bank NV Netherlands Full 100.00% 100.00% Landspire Ltd. UK Full 100.00% 100.00% BNP Paribas Capital Investments Ltd. UK Full 100.00% 100.00% 31/12/2010 < thresholds BNP Paribas CMG Ltd. UK Full 100.00% 100.00% Mermoz Jet Finance 1 Spain 31/12/2009 Purchase Full 100.00% 74.93% BNP Paribas Commodity Futures Ltd. UK Full 100.00% 100.00% 31/12/2010 Full 100.00% 74.93% BNP Paribas Cyprus Ltd. Cyprus Full 100.00% 100.00% Money Alpha 1 France 4 31/12/2009 Purchase Full 100.00% 74.93% BNP Paribas E & B Ltd. UK Full 100.00% 100.00% 31/12/2010 Full 100.00% 74.93% BNP Paribas Finance PLC UK Full 100.00% 100.00% Money Beta 1 France 31/12/2009 Purchase Full 100.00% 74.93% BNP Paribas Fortis Funding (ex- Fortis 31/12/2010 Full 100.00% 74.93% 1 Luxembourg 31/12/2010 Partial Full 100.00% 53.43% Luxembourg Finance SA) 31/12/2009 Purchase Full 100.00% 74.93% Paribas Trust Luxembourg SA Luxembourg disposal 31/12/2009 Full 100.00% 100.00% BNP Paribas Net Ltd. UK Full 100.00% 100.00% 31/12/2010 < thresholds BNP Paribas UK Holdings Ltd. UK Full 100.00% 100.00% Pattison 1 Luxembourg 31/12/2009 Purchase Full 100.00% 53.43% BNP Paribas UK Ltd. UK Full 100.00% 100.00% 31/12/2010 < thresholds BNP PUK Holding Ltd. UK Full 100.00% 100.00% Prestibel Left Village 1 Belgium 31/12/2009 Purchase Equity 2 70.06% 52.50% BNP Paribas ZAO Russia Full 100.00% 100.00% 31/12/2010 < thresholds 31/12/2010 < thresholds Quainton Funding SARL. 1 Luxembourg Calilux SARL Luxembourg 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2009 Full 60.00% 60.00% 31/12/2010 < thresholds Camomile Asset Finance (N° 5) 31/12/2010 < thresholds Tabor Funding 1 Luxembourg 1UK 31/12/2009 Purchase Full 100.00% 53.43% Partnership 31/12/2009 Purchase Full 100.00% 74.93% Additional 31/12/2010 < thresholds 31/12/2010 Full 100.00% 100.00% Upper Hatch Securities Ltd. 1 Ireland Camomile Investments UK Ltd. 1 UK purchase 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2009 Purchase Full 100.00% 74.93% Utexam Ltd. Ireland Full 100.00% 100.00% Capstar Partners Ltd. UK Full 100.00% 100.00% 31/12/2010 Full 100.00% 100.00% 31/12/2010 < thresholds Dalgarno 1 Luxembourg Utexam Logistics Ltd. Ireland Passing 31/12/2009 Purchase Full 100.00% 53.43% 31/12/2009 qualifying Full 100.00% 100.00% thresholds 31/12/2010 < thresholds Delvino 1 Luxembourg Vartry Reinsurance Ltd. Ireland Full 4 100.00% 100.00% 31/12/2009 Purchase Full 100.00% 53.43% Americas 31/12/2010 < thresholds Additional Eris Investissements 1 Luxembourg 31/12/2010 Equity 50.00% 50.00% 31/12/2009 Purchase Full 100.00% 53.43% ACG Capital Partners LLC 1 USA purchase 31/12/2009 Purchase Equity 50.00% 37.47% Euraussie Finance SARL Luxembourg Full 100.00% 100.00% ACG Capital Partners II LLC USA 31/12/2010 Incorporation Equity 50.00% 50.00% 31/12/2010 Full 100.00% 74.93% FB Energy Trading S.à R.L. 1 Luxembourg Additional 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2010 purchase & ACG Investment Capital Partners LLC 1 USA < thresholds 31/12/2010 Full 100.00% 100.00% 31/12/2009 Purchase Equity 50.00% 37.47% Fidex Holdings Ltd. UK Passing 31/12/2009 qualifying Full 100.00% 100.00% Banco BNP Paribas Brasil SA Brazil Full 100.00% 100.00% thresholds Passing 31/12/2010 < thresholds Fortis Film Fund SA 1 Belgium Banexi Holding Corporation USA 31/12/2010 qualifying Full 100.00% 100.00% 31/12/2009 Purchase Full 100.00% 74.93% thresholds 31/12/2010 Full 100.00% 74.93% BNP Paribas Canada Canada Full 100.00% 100.00% Fortis International Finance (Dublin) 1 Ireland Passing 31/12/2009 Purchase Full 100.00% 74.93% BNP Paribas Capital Services Inc. Canada 31/12/2010 qualifying Full 100.00% 100.00% thresholds
(*) French subsidiaries whose regulatory supervision falls within the scope of the consolidated Group, in accordance with article 4.1 of CRBF regulation 2000.03. 1 Allocation of BNP Paribas Fortis and BGL BNP Paribas activities to BNP Paribas Group businesses. 2 Simplifi ed consolidation by the equity method (non-material entities). 3 Entities excluded from prudential scope of consolidation. 4 Entities consolidated under the equity method for prudential purposes.
226 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) BNP Paribas Capstar Partners Inc. USA Full 100.00% 100.00% 31/12/2010 < thresholds Fortis Prime Fund Solutions (USA) LLC 1 USA BNP Paribas Commodity Futures Inc. USA Full 100.00% 100.00% 31/12/2009 Purchase Full 100.00% 74.93% Additional Additional BNP Paribas Energy Trading Canada Corp 31/12/2010 purchase Full 100.00% 100.00% 31/12/2010 purchase Full 100.00% 100.00% (ex- FB Energy Canada Corp) 1 Canada Fortis Proprietary Capital Inc. 1 USA 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2009 Purchase Full 100.00% 74.93% Additional Additional BNP Paribas Energy Trading GP (ex- Fortis 31/12/2010 purchase Full 100.00% 100.00% 31/12/2010 purchase Full 100.00% 100.00% Energy Marketing & Trading GP) 1 USA Fortis Securities LLC 1 USA 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2009 Purchase Full 100.00% 74.93% Passing French American Banking Corporation BNP Paribas Energy Trading Holdings, Inc. USA 31/12/2010 qualifying Full 100.00% 100.00% - F.A.B.C USA Full 100.00% 100.00% thresholds 31/12/2010 Additional Full 100.00% 100.00% Passing FSI Holdings Inc. 1 USA purchase BNP Paribas Energy Trading LLC USA 31/12/2010 qualifying Full 100.00% 100.00% 31/12/2009 Purchase Full 100.00% 74.93% thresholds BNP Paribas Leasing Corporation USA Full 100.00% 100.00% Harewood Asset Management (US) Inc. USA Full 100.00% 100.00% BNP Paribas Mortgage Corporation USA Full 100.00% 100.00% Innocap Investment Management Inc. Canada Equity 25.00% 25.00% BNP Paribas North America Inc. USA Full 100.00% 100.00% Paribas North America Inc. USA Full 100.00% 100.00% Petits Champs Participaçoes e BNP Paribas Prime Brokerage Inc. USA Full 100.00% 100.00% Serviços SA Brazil Full 100.00% 100.00% BNP Paribas Prime Brokerage Cayman Full 100.00% 100.00% 31/12/2010 Additional Equity 100.00% 74.68% International Ltd. Islands RFH Ltd. 1 Bermuda purchase BNP Paribas Principal Inc. USA 31/12/2009 < thresholds 31/12/2009 Purchase Equity 50.00% 49.57% BNP Paribas RCC Inc. USA Full 100.00% 100.00% 31/12/2010 Full 99.66% 74.68% TCG Fund I, L.P 1 Cayman 4 BNP Paribas Securities Corporation USA Full 100.00% 100.00% Islands 31/12/2009 Incorporation Full 100.00% 74.68% Cayman 31/12/2010 < thresholds 31/12/2010 Equity 25.00% 18.67% Camomile Alzette Investments (UK) Ltd. 1 Textainer Marine Containers Ltd. 1 Bermuda Islands 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2009 Purchase Equity 25.00% 18.73% 31/12/2010 Additional Full 100.00% 100.00% Passing Cayman purchase Trip Rail Holdings LLC USA 31/12/2010 qualifying Equity 16.33% 12.19% Camomile Canopia Trading (UK) Ltd. 1 Islands 31/12/2009 Purchase Full 100.00% 74.93% thresholds Passing Additional Via North America, Inc. USA 31/12/2010 qualifying Full 100.00% 100.00% Cayman 31/12/2010 purchase Full 100.00% 100.00% Camomile Pearl (UK) Ltd. 1 Islands thresholds 31/12/2009 Purchase Full 100.00% 74.93% Asia - Oceania Additional Cayman 31/12/2010 purchase Full 100.00% 100.00% ACG Capital Partners Singapore Pte. Ltd Singapore 31/12/2010 Incorporation Equity 50.00% 50.00% Camomile Ulster Investments (UK) Ltd. 1 Islands 31/12/2009 Purchase Full 100.00% 74.93% BNP Equities Asia Ltd. Malaysia Full 100.00% 100.00% Capstar Partners LLC USA Full 100.00% 100.00% BNP Pacifi c (Australia) Ltd. Australia Full 100.00% 100.00% Partial BNP Paribas (China) Ltd. China Full 100.00% 100.00% disposal & 31/12/2010 Integration in BNP Paribas Arbitrage (Hong-Kong) Ltd. Hong Kong Full 100.00% 100.00% CF Leasing Ltd. 1 Bermuda the Cronos Group BNP Paribas Capital (Asia Pacifi c) Ltd. Hong Kong Full 100.00% 100.00% 31/12/2009 Purchase Equity 2 50.00% 51.93% BNP Paribas Capital (Singapore) Ltd. Singapore Full 100.00% 100.00% CooperNeff Group Inc. USA Full 100.00% 100.00% BNP Paribas Finance (Hong-Kong) Ltd. Hong Kong Full 100.00% 100.00% Cronos Holding Company Ltd. (Groupe) Bermuda 31/12/2010 Purchase Equity 30.00% 22.40% BNP Paribas Futures (Hong-Kong) Ltd. Hong Kong Full 100.00% 100.00% 31/12/2010 Full 100.00% 74.93% BNP Paribas India Solutions Private Ltd. India Full 100.00% 100.00% FB Energy Holdings LLC 1 USA 31/12/2009 Purchase Full 100.00% 74.93% BNP Paribas Japan Ltd. Japan Full 100.00% 100.00% Purchase & BNP Paribas Principal Investments Japan Full 100.00% 100.00% FB Funding Company 1 Canada 31/12/2009 Disposal Japan Ltd. 31/12/2010 Full 100.00% 74.93% BNP Paribas Securities (Asia) Ltd. Hong Kong Full 100.00% 100.00% FB Holdings Canada Corp 1 Canada 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2010 Full 100.00% 66.93% BNP Paribas Securities India Private Ltd. India 31/12/2010 Full 100.00% 74.93% 31/12/2009 Incorporation Full 100.00% 67.08% FB Transportation Capital LLC 1 USA 31/12/2009 Purchase Full 100.00% 74.93% BNP Paribas Securities (Japan) Ltd. Hong Kong Full 100.00% 100.00% 31/12/2010 Liquidation BNP Paribas Securities (Taiwan) Co Ltd. Taiwan Full 100.00% 100.00% FBC Ltd. 1 Bermuda BNP Paribas Securities Korea Company 31/12/2009 Purchase Full 100.00% 74.93% Ltd. South Korea Full 100.00% 100.00% Fortis (USA) Financial Markets LLC 1 USA 31/12/2009 Purchase & BNP Paribas Securities (Singapore) Dissolution Pte Ltd. Singapore Full 100.00% 100.00% Additional 31/12/2010 Full 100.00% 100.00% BNP Paribas Services Hong Kong Full 100.00% 100.00% Fortis Capital Corporation 1 USA purchase (Hong Kong) Ltd. 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2010 Full 100.00% 100.00% 31/12/2010 Merger BPP Holdings Pte Ltd. Singapore Passing qualifying Fortis Capital (Canada) Ltd. 1 Canada thresholds Full 100.00% 100.00% 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2009 Purchase & 31/12/2010 < thresholds Fortis Clearing Americas LLC 1 USA 31/12/2009 Disposal Celestial Hong Kong Ltd. (ex- BNP Paribas SCM Asia (Hong Kong) Ltd.) Hong Kong Fortis Financial Services LLC 1 USA 31/12/2009 Purchase 31/12/2009 Full 100.00% 100.00% & Merger Additional 31/12/2010 Full 100.00% 74.93% 31/12/2010 purchase Full 100.00% 100.00% Fortis Funding LLC 1 USA Generale Belgian Finance Cy Ltd. 1 Hong Kong 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2009 Purchase Full 100.00% 74.93% Cayman Purchase & Paribas Asia Equity Ltd. Hong Kong Full 100.00% 100.00% Fortis Ifi co 1 Islands 31/12/2009 Dissolution PT Bank BNP Paribas Indonésia Indonesia Full 100.00% 99.99%
2010 Registration document and fi nancial report - BNP PARIBAS 227 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) PT BNP Paribas Securities Indonesia Indonesia Full 99.00% 99.00% Boug BV Netherlands Full 31/12/2010 Additional Full 100.00% 100.00% China Jenna Finance 1 à 3 SAS France Full Wa Pei Finance Company Ltd. 1 Hong Kong purchase 31/12/2009 Purchase Full 100.00% 74.93% China Lucie Finance 1 à 3 SAS France Full China Marie Finance 1 et 2 SAS France Full 31/12/2010 Additional Full 100.00% 100.00% Wa Pei Properties Ltd. 1 Hong Kong purchase China Newine Finance 1 à 4 SAS France Full 31/12/2009 Purchase Full 100.00% 74.93% China Samantha Finance 1 à 10 SAS France Full Special Purpose Entities Compagnie Financière de la Porte Luxembourg Full 54 Lombard Street Investments Ltd. UK Full Neuve SA 2007 Panda Finance 2 SAS France Full Compagnie Investissement Italiens SNC France Full 2008 Marie Finance SAS France Full Compagnie Investissement Opéra SNC France Full 2008 Newine Finance 5 SAS France Full Cayman 31/12/2010 Dissolution Crisps Ltd. Islands 2008 Panda Finance 6 SAS France Full 31/12/2009 Full 2008 Panda Finance 7 SAS France Full CSACL Tiger Finance France 31/12/2010 Incorporation Full 2008 Panda Finance 11 SAS France Full Delphinus Titri 2010 SA Luxembourg 31/12/2010 Incorporation Full Cayman 31/12/2010 Full Epping Funding Ltd. Islands 31/12/2009 Dissolution 2009 Koala Finance - MSN 36742 France 31/12/2009 Incorporation Full Cayman Epsom Funding Ltd. Islands Full 31/12/2010 Full 3 Alandes BV 1 Netherlands Esra 1 à 3 SAS France Full 4 31/12/2009 Purchase Full 3 Fidex Ltd. UK Full Alectra Finance PLC Ireland Full Financière des Italiens SAS France Full 31/12/2010 Liquidation APAC Finance Ltd. New Zealand Financière Paris Haussmann France Full 31/12/2009 Full Financière Taitbout France Full 31/12/2010 Liquidation APAC Investments Ltd. New Zealand Fintrack Bayamo France 31/12/2009 Merger 31/12/2009 Full Fintrack Foehn France 31/12/2009 Merger APAC NZ Holdings Ltd. New Zealand Full 31/12/2010 Merger Fintrack Sirocco France Aquarius Capital Investments Ltd. Ireland Full 31/12/2009 Purchase Full Cayman ARV International Ltd. Islands Full 31/12/2010 < thresholds Global Liberté Ireland 31/12/2010 Full 31/12/2009 Full Astir BV 1 Netherlands 31/12/2009 Purchase Full Grenache et Cie SNC Luxembourg Full Atargatis SNC France Full Harewood Investments N° 2 à 4 Ltd. UK Full Aura Capital Investment SA Luxembourg 31/12/2010 Incorporation Full Cayman Harewood Investments N° 5 Ltd. Islands Full Austin Finance France Full Harewood Investments N° 7 Ltd. Cayman 31/12/2010 Incorporation Full Betul 1 à 4 France 31/12/2010 Incorporation Full Islands 31/12/2010 < thresholds 31/12/2010 Full Henaross Pty Ltd. Australia Black Kite Investment Ltd. Ireland 31/12/2009 Full 31/12/2009 Incorporation Full Cayman BNP Paribas Arbitrage Issuance BV Netherlands Full Highbridge Ltd. Islands 31/12/2009 < thresholds 31/12/2010 Full Iliad Investments PLC Ireland Full BNP Paribas Complex Fundo de Brazil Passing Laffi tte Participation 2 France 31/12/2009 Merger Investimento Multimercado 31/12/2009 qualifying Full thresholds Laffi tte Participation 10 France 31/12/2009 Merger Passing Laffi tte Participation 12 France 31/12/2009 Merger BNP Paribas EQD Brazil Fund Fundo Brazil 31/12/2010 qualifying Full Invest Multimercado thresholds Leveraged Finance Europe Capital V BV Netherlands Full BNP Paribas Emission-und Handel. GmbH Germany Full Passing Liquidity Ltd. Cayman 31/12/2010 qualifying Full BNP Paribas Finance Inc. USA Full Islands thresholds BNP Paribas Islamic Issuance BV Netherlands Full 31/12/2010 Dissolution Lisia I Ltd. 1 Jersey 31/12/2010 Full 31/12/2009 Purchase Full BNP Paribas Proprietario Fundo de Brazil Passing Lock-In Global Equity Ltd. Cayman 31/12/2009 Dissolution Investimento Multimercado 31/12/2009 qualifying Full Islands thresholds Cayman Marc Finance Ltd. Islands Full BNP Paribas Singapore Funding Singapore 31/12/2009 < thresholds Partnership Méditerranéa SNC France Full BNP Paribas VPG Brookline Cre, LLC USA 31/12/2010 Incorporation Full Muscat Investments Ltd. Jersey 31/12/2009 < thresholds BNP Paribas VPG Master LLC USA 31/12/2010 Incorporation Full Omega Capital Investments Plc Ireland Full BNP Paribas VPG SDI Media LLC USA 31/12/2010 Incorporation Full Omega Capital Europe PLC Ireland Full BNP Paribas VPG Semgroup LLC USA 31/12/2010 Incorporation Full
(*) French subsidiaries whose regulatory supervision falls within the scope of the consolidated Group, in accordance with article 4.1 of CRBF regulation 2000.03. 1 Allocation of BNP Paribas Fortis and BGL BNP Paribas activities to BNP Paribas Group businesses. 2 Simplifi ed consolidation by the equity method (non-material entities). 3 Entities excluded from prudential scope of consolidation. 4 Entities consolidated under the equity method for prudential purposes.
228 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) Omega Capital Funding Ltd. Ireland Full 31/12/2010 < thresholds Fortis Private Equity Management NV 1 Belgium Optichamps France Full 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2010 < thresholds 31/12/2010 Full 100.00% 74.93% Parritaye Pty Ltd. Australia Fortis Private Equity Venture Belgium SA 1 Belgium 31/12/2009 Full 31/12/2009 Purchase Full 100.00% 74.93% Participations Opéra France Full Gepeco Belgium Full 100.00% 100.00% Reconfi guration BV Netherlands 31/12/2010 Incorporation Full Purchase & Nazca Capital S.G.E.C.R. SA 1 Spain 31/12/2009 Disposal 31/12/2010 Full Purchase & Renaissance Fund III Japan Passing Nazca Directorships I, S.L. 1 Spain 31/12/2009 Disposal 31/12/2009 qualifying Full Purchase & thresholds Nazca Directorships II, S.L. 1 Spain 31/12/2009 Disposal 31/12/2010 Full Nazca Directorships III, S.L. 1 Spain 31/12/2009 Purchase & Renaissance Fund IV Japan Passing Disposal 31/12/2009 qualifying Full 31/12/2010 < thresholds thresholds Nazca Inversiones SA 1 Spain 31/12/2009 Purchase Full 100.00% 74.92% Ribera del Loira Arbitrage SL Spain Full Paribas Participations Limitée Canada Full 100.00% 100.00% Robin Flight Ltd. Ireland Full Property companies (property used in operations) Royale Neuve II Sarl Luxembourg Full Antin Participation 5 France Full 100.00% 100.00% Royale Neuve V Sarl Luxembourg Full Ejesur Spain Full 100.00% 100.00% Royale Neuve VI Sarl Luxembourg Full Foncière de la Compagnie Bancaire SAS France Full 100.00% 100.00% Royale Neuve Finance SARL Luxembourg Full Noria SAS France Full 100.00% 100.00% 4 31/12/2010 Full Royale Neuve Investments Sarl Luxembourg Société Immobilière Marché Saint- 31/12/2009 Incorporation Full Honoré France Full 100.00% 100.00% 31/12/2010 Full Société d’Etudes Immobilières de France Full 100.00% 100.00% Scaldis Capital (Ireland) Ltd. 1 Ireland Constructions - Setic 31/12/2009 Purchase Full Investment companies and other subsidiaries 31/12/2010 Full 3 31/12/2010 Full 4 100.00% 100.00% Scaldis Capital Ltd. 1 Jersey Ardi Immo Luxembourg 31/12/2009 Purchase Full 3 31/12/2009 Full 4 100.00% 100.00% Passing Scaldis Capital LLC 1 USA 31/12/2010 qualifying Full BNL International Investment SA Luxembourg Full 100.00% 100.00% thresholds BNL Multiservizi SRL Italy Equity 2 100.00% 100.00% Singapore Emma Finance 1 & 2 SAS France Full BNP Paribas Home Loan Covered (*) France Full 100.00% 100.00% Stradios FCP FIS Luxembourg 31/12/2010 Incorporation Full Bonds BNP Paribas International BV Netherlands Full 100.00% 100.00% Sunny Funding Ltd. Cayman Full Islands BNP Paribas Méditerranée Innovation & Morocco Full 100.00% 96.67% Swallow Flight Ltd. Ireland Full Technologies BNP Paribas Partners for Innovation France Equity 50.00% 50.00% Swan 1 à 3 SAS France Full (Groupe) 31/12/2010 Full 100.00% 100.00% Tender Option Bond Municipal program USA Full BNP Paribas Public Sector (*) France Thunderbird Investments PLC Ireland Full 31/12/2009 Incorporation Full 100.00% 100.00% Other Business Units 31/12/2010 Full 4 100.00% 100.00% BNP Paribas SB Re Luxembourg Private Equity (BNP Paribas Capital) 31/12/2009 Incorporation Full 4 100.00% 100.00% Cobema Belgium Full 100.00% 100.00% BNP Paribas UK Treasury Ltd. UK Full 100.00% 100.00% Compagnie d’Investissements de Compagnie Financière Ottomane SA Luxembourg Full 96.86% 96.86% Paris - C.I.P France Full 100.00% 100.00% Erbe Belgium Equity 47.01% 47.01% Financière BNP Paribas France Full 100.00% 100.00% Purchase & Financière du Marché Saint Honoré France Full 100.00% 100.00% FCM Private Equity II SL 1 Spain 31/12/2009 Disposal 31/12/2010 < thresholds 31/12/2010 < thresholds FCM Private Equity SL 1 Spain Fintrimo SA 1 Belgium 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2009 Purchase Equity 50.00% 46.83% 31/12/2010 Dissolution 31/12/2010 Full 100.00% 74.93% Fondo Nazca I FCR 1 Spain Fortis Bank Reinsurance SA 1 Luxembourg 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2009 Purchase Full 100.00% 74.93% Purchase & Additional Fondo Nazca II FCR 1 Spain 31/12/2009 Disposal 31/12/2010 purchase & Fortis Money Short Term Fund 1 France Liquidation 31/12/2010 < thresholds Fortis Private Equity Asia Fund SA 1 Belgium 31/12/2009 Purchase Full 100.00% 73.34% 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2010 Full 4 100.00% 74.93% 31/12/2010 Full 100.00% 74.93% GeneralCorp 10 1 Luxembourg Fortis Private Equity Belgium NV 1 Belgium 31/12/2009 Purchase Full 4 100.00% 74.93% 31/12/2009 Purchase Full 100.00% 74.93% Purchase & Generale Bank Pref II NV 1 Netherlands 31/12/2009 Dissolution Fortis Private Equity Expansion 31/12/2010 Full 100.00% 74.93% Belgium NV 1 Belgium 31/12/2010 < thresholds 31/12/2009 Purchase Full 100.00% 74.93% Genfi nance International SA 1 Belgium 31/12/2010 Full 99.90% 74.86% 31/12/2009 Purchase Full 100.00% 74.93% Fortis Private Equity France Fund 1 France 31/12/2009 Purchase Full 99.91% 74.87% GIE Groupement Auxiliaire de Moyens France Full 100.00% 100.00% 31/12/2010 < thresholds 31/12/2010 Disposal Fortis Private Equity France SAS 1 France Internaxx Bank 1 Luxembourg 31/12/2009 Purchase Full 100.00% 74.93% 31/12/2009 Purchase Equity 25.00% 13.35% Le Sphinx Assurances Luxembourg SA Luxembourg Equity 2 100.00% 100.00%
2010 Registration document and fi nancial report - BNP PARIBAS 229 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) 31/12/2010 Full 100.00% 74.93% Bruun’s Galleri AS Denmark Full 100.00% 28.94% Margaret Inc. (ex- Montag & Caldwell 1 USA Inc.) 31/12/2009 Purchase Full 100.00% 74.93% Bryggen Vejle AS Denmark Full 100.00% 28.94% Omnium de Gestion et de Developpe- Camato AS Norway 31/12/2009 Merger ment Immobilier France Full 100.00% 100.00% Partial Capucine BV Netherlands Full 100.00% 51.59% Plagefi n - Placement, Gestion, Finance 31/12/2010 disposal Full 100.00% 53.43% Holding SA Luxembourg Carré Jaude 2 France Full 100.00% 51.59% 31/12/2009 Full 100.00% 100.00% CB Pierre SAS France Full 100.00% 51.59% 31/12/2010 Equity 50.00% 26.71% Postbank Ireland Ltd. 1 Ireland Cecobil SAS France Prop. 50.00% 25.79% 31/12/2009 Purchase Equity 50.00% 26.71% Cecoville SAS France Full 100.00% 51.59% Sagip Belgium Full 100.00% 100.00% Centre Bourse SC France Full 100.00% 51.59% Société Auxiliaire de Construction Immobilière - SACI France Full 100.00% 100.00% Centre Jaude Clermont SAS France Full 100.00% 51.59% Société Orbaisienne de Participations France Full 100.00% 100.00% Clivia SPA Italy Prop. 50.00% 25.79% UCB Bail (*) France Full 100.00% 100.00% Combault SCI France Full 100.00% 51.59% UCB Entreprises(*) France Full 100.00% 100.00% Compagnie Immobilière du Brabant Wallon - Coimbra SA Belgium Full 100.00% 51.59% UCB Locabail immobilier(*) France Equity 2 100.00% 100.00% Corvin Retail Hungary Full 100.00% 51.59% Verner Investissements (Groupe) France Equity 40.00% 50.00% Cspl 2002 Hungary Full 100.00% 51.59% WDI Reinsurance SA (ex-BNP Paribas de Réassurance au Luxembourg) Luxembourg 31/12/2009 Disposal Debrecen 2002 Hungary Full 100.00% 51.59% Special Purpose Entities Des Dunes SCI France Prop. 50.00% 25.79% 4 BNP Paribas Capital Trust LLC 3 -4 - 6 USA Full Des Salines SCI France Prop. 50.00% 25.79% BNP Paribas US Medium Term Notes 31/12/2010 Disposal Program USA Full Down Town Drift AS Norway 31/12/2009 Full 100.00% 28.73% BNP Paribas US Structured Medium USA Full Term Notes LLC Du Plateau SCI France Equity 30.00% 12.52% Purchase & Park Mountain Lease 2008-I BV 1 Netherlands 31/12/2009 Dissolution Full Duna Plaza Hungary Full 100.00% 51.59% Klépierre Duna Plaza Irodahaz Hungary Full 100.00% 51.59% Klépierre SA France Full 56.74% 51.59% Edamarzy SCI France 31/12/2009 Merger Effe Kappa SARL Italy 31/12/2009 Merger Acheres 2000 SCI France Equity 30.00% 15.48% 31/12/2010 Dissolution Ejendomsselskabet Klampenborgvej I/S Denmark Albert 31 SCI France Full 100.00% 42.82% 31/12/2009 Prop. 50.00% 14.36% Czech Amanda Storesenter AS Norway Full 100.00% 28.94% Entertainment Plaza Republic Full 100.00% 51.59% Angoumars SNC France Full 100.00% 51.59% Entreprenorselskapet AF Denmark Full 100.00% 28.94% 31/12/2010 Dissolution Fastighets AB Allum Sweden Full 100.00% 28.94% Anpartsselskabet AF Denmark 31/12/2009 Full 100.00% 28.73% Fastighets AB Borlange Kopcentrum Sweden Full 100.00% 28.94% Arcol Group AS Slovakia Full 100.00% 51.59% Fastighets AB Centrum Vasterort Sweden Full 100.00% 28.94% Arken Drift AS Norway Prop. 49.90% 14.45% Fastighets AB CentrumInvest Sweden Full 100.00% 28.94% Arken Holding AS Norway 31/12/2009 Merger Fastighets AB Emporia Sweden Full 100.00% 28.94% Passing Fastighets AB Hageby Centrum Sweden Full 100.00% 28.94% Asane Senter AS Norway 31/12/2010 qualifying Prop. 49.90% 14.44% thresholds Fastighets AB Lackeraren Borlange Sweden 31/12/2010 Purchase Full 100.00% 28.94% Asane Storsenter DA Norway Prop. 49.90% 14.45% Fastighets AB Lantmateribacken Sweden Full 100.00% 28.94% Aulnes Developpement SCI France Prop. 50.00% 13.15% Fastighets AB Marieberg Centrum Sweden Full 100.00% 28.94% Bassin Nord SCI France Prop. 50.00% 25.79% Fastighets AB Molndal Centrum Sweden Full 100.00% 28.94% Beau Sevran Invest SCI France Full 100.00% 42.82% Fastighets AB Overby Kopcentrum Sweden Full 100.00% 28.94% 31/12/2010 Full 52.00% 26.83% Fastighets AB P Akanten Sweden Full 100.00% 28.94% Additional Begles Arcins SCS France 31/12/2009 purchase Full 52.00% 26.92% Fastighets AB P Brodalen Sweden Full 100.00% 28.94% 31/12/2008 Prop. 50.00% 26.55% Fastighets AB P Porthalla Sweden Full 100.00% 28.94% Bègles Papin SCI France Full 100.00% 51.59% Fastighets AB Sollentuna Centrum Sweden Full 100.00% 28.94% Belvedere Invest SARL France Full 75.00% 38.69% Fastighets AB Uddevallatorp Sweden Full 100.00% 28.94% Besançon Chalezeule SCI France Full 100.00% 51.59% Fastighets AB Viskaholm Sweden Full 100.00% 28.94% Czech Farmandstredet ANS Norway Full 100.00% 28.94% Bestes Republic Full 100.00% 51.59% Farmandstredet Eiendom AS Norway Full 100.00% 28.94% Bois des Fenêtres SARL France Equity 20.00% 10.32% 31/12/2010 Merger BPSA 10 Portugal 31/12/2009 Purchase Farmanstredet Drift AS Norway & Merger 31/12/2009 Full 100.00% 29.04%
(*) French subsidiaries whose regulatory supervision falls within the scope of the consolidated Group, in accordance with article 4.1 of CRBF regulation 2000.03. 1 Allocation of BNP Paribas Fortis and BGL BNP Paribas activities to BNP Paribas Group businesses. 2 Simplifi ed consolidation by the equity method (non-material entities). 3 Entities excluded from prudential scope of consolidation. 4 Entities consolidated under the equity method for prudential purposes.
230 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) Fayesgate 7 Eiendom AS Norway 31/12/2009 Merger Kle Projet 1 SAS France Full 100.00% 51.59% Field’s Copenhagen IS Denmark Full 100.00% 28.94% Kle Projet 2 SAS France 31/12/2009 Merger Field’s Ejer I AS Denmark Full 100.00% 28.94% 31/12/2010 < thresholds Kleaveiro Immobiliaria SA Portugal Field’s Ejer II AS Denmark Full 100.00% 28.94% 31/12/2009 Full 100.00% 51.21% Finascente SA Portugal 31/12/2009 Dissolution Kleber la Perouse SNC France Full 100.00% 51.59% Foncière de Louvain la Neuve SA Belgium Full 100.00% 51.59% Klecapnor SAS France Full 100.00% 43.39% Foncière Saint Germain SNC France Full 100.00% 51.59% Klecar Europe Sud SCS France Full 83.00% 42.82% Forving SARL France Full 90.00% 46.43% Klecar Foncier Espana SA Spain Full 100.00% 42.82% 31/12/2010 Dissolution Klecar Foncier Iberica SA Spain Full 100.00% 42.82% Fritzoe Brygge Drift AS Norway 31/12/2009 Full 100.00% 28.73% Klecar France SNC France Full 83.00% 42.82% Galae SNC France Full 100.00% 51.59% Klecar Italia SPA Italy Full 100.00% 42.82% Galeria Parque Nascente - Exploracao de Klecar Participations Italie SAS France Full 83.00% 42.82% espaços comerciais SA Portugal Full 100.00% 51.59% Galeries Drancéennes France Full 100.00% 51.59% Klefi n Italia SPA Italy Full 100.00% 51.59% Galleria Commerciale Assago SRL Italy Full 100.00% 51.59% Klege Portugal SA Portugal Prop. 50.00% 25.79% Galleria Commerciale Cavallino SRL Italy Full 100.00% 51.59% Klelou Imobiliaria SA Portugal Full 100.00% 51.59% 31/12/2010 Full 100.00% 51.59% Galleria Commerciale Collegno SRL Italy Full 100.00% 51.59% Klementine BV Netherlands 31/12/2010 Prop. 50.00% 25.79% 31/12/2009 Incorporation Full 100.00% 51.21% Galleria Commerciale Il Destriero SRL Italy 31/12/2009 Purchase Prop. 50.00% 25.60% Kleminho Imobiliaria SA Portugal Full 100.00% 51.59% 4 Galleria Commerciale Klépierre SRL Italy Full 100.00% 51.59% Klemurs SAS France Full 84.11% 43.39% Galleria Commerciale Serravalle SPA Italy Full 100.00% 51.59% Klenord Imobiliaria SA Portugal Full 100.00% 51.59% Galleria Commerciale Solbiate SRL Italy Full 100.00% 51.59% Klepierre Athinon Foncière Greece Full 100.00% 42.82% 31/12/2010 Merger Klépierre Conseil SNC France Full 100.00% 51.59% Général Leclerc 11-11bis Levallois SNC France 31/12/2009 Full 100.00% 51.21% Klepierre Corvin Hungary Full 100.00% 51.59% Girardin SCI France Prop. 33.40% 17.23% Klépierre Créteil SCI France Full 100.00% 51.59% Gondobrico - Comercio de produtos e Klepierre CZ SRO Czech Full 100.00% 51.59% artigos de bricolage SA Portugal Full 100.00% 51.59% Republic Grytingen Nya AB Sweden Full 64.79% 18.76% Klépierre Finance SAS France Full 100.00% 51.59% Gulskogen Prosjekt & Eiendom AS Norway Full 100.00% 28.94% Klepierre Galeria Krakow SP z.o.o Poland Full 100.00% 51.59% Gulskogen Senter ANS Norway Full 100.00% 28.94% Klepierre Galeria Poznan SP z.o.o Poland Full 100.00% 51.59% Györ 2002 Hungary Full 100.00% 51.59% Klepierre Krakow SP z.o.o Poland Full 100.00% 51.59% Hamar Panorama AS Norway 31/12/2009 Merger Klepierre Larissa Ltd. Greece Full 100.00% 51.59% Hamar Storsenter AS Norway Full 100.00% 28.94% Klepierre Lublin SP z.o.o Poland Full 100.00% 51.59% 31/12/2010 Merger Klépierre Luxembourg SA Luxembourg Full 100.00% 51.59% Hamar Storsenterdrift AS Norway 31/12/2009 Full 100.00% 28.73% Klepierre Makedonia Foncière Greece Full 100.00% 42.82% Holding Gondomar 1 SAS France Full 100.00% 51.59% Klepierre Matera SRL Italy Full 100.00% 51.59% 31/12/2010 Merger Holding Gondomar 3 SAS France Full 100.00% 51.59% Klepierre Meteores Luxembourg Holding Gondomar 4 SAS France Full 100.00% 51.59% 31/12/2009 Full 100.00% 51.21% Holding Klege SARL Luxembourg Prop. 50.00% 25.79% Klepierre NEA Efkarpia Foncière Greece Full 100.00% 42.82% 31/12/2010 Disposal Klepierre Nordica BV Netherlands Full 100.00% 51.59% Holmen Senterdrift AS Norway Klépierre Participations et Financements 31/12/2009 Full 100.00% 28.73% SAS France Full 100.00% 51.59% Hovlandbanen AS Norway Full 100.00% 28.94% Klepierre Perivola of Patra Foncière Greece Full 100.00% 42.82% ICD SPA Luxembourg 31/12/2009 Merger Czech Klepierre Plzen AS Republic Full 100.00% 51.59% Immo Dauland France Full 100.00% 43.40% Klepierre Pologne SP z.o.o Poland Full 100.00% 51.59% 31/12/2010 Full 71.30% 36.78% Klepierre Portugal SGPS SA Portugal Full 100.00% 51.59% Additional Immobiliare Gallerie Commerciali S.p.A. Italy 31/12/2009 purchase Full 71.30% 36.51% Klepierre Poznan SP z.o.o Poland Full 100.00% 51.59% 31/12/2008 Prop. 50.00% 26.55% Klepierre Rybnik SP z.o.o Poland Full 100.00% 51.59% Immobiliare Magnolia SARL Luxembourg 31/12/2009 Merger Klepierre Sadyba SP z.o.o Poland Full 100.00% 51.59% Immobilière de la Pommeraie SCI France Prop. 50.00% 25.79% Klepierre Sosnowiec SP z.o.o Poland Full 100.00% 51.59% K2 Fund Italy Full 85.00% 43.85% Klépierre Tourville France Full 100.00% 51.59% Kanizsa 2002 Hungary Full 100.00% 51.59% Klepierre Trading Energia Kereskedelmi es Szolgaltato KFT Hungary Full 100.00% 51.59% Kaposvar 2002 Hungary Full 100.00% 51.59% Klepierre Vallecas SA Spain Full 100.00% 51.59% 31/12/2010 Disposal Karl Johansgate 16 AS Norway Klepierre Vinaza SA Spain Full 100.00% 51.59% 31/12/2009 Full 100.00% 28.73% Klepierre Warsaw Sp z.o.o Poland Full 100.00% 51.59% KC 1 à 12 SNC France Full 100.00% 42.82% Kletel Imobiliaria SA Portugal Full 100.00% 51.59% KC20 SNC France Full 100.00% 42.82% Kletransactions SNC France Full 100.00% 51.59% KLE 1 SAS France Full 100.00% 51.59% Krakow Plaza SP z.o.o Poland Full 100.00% 51.59%
2010 Registration document and fi nancial report - BNP PARIBAS 231 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) 31/12/2010 Disposal 31/12/2010 Disposal Krokstadelva Senterdrift AS Norway Mosseporten Drift AS Norway 31/12/2009 Full 100.00% 28.73% 31/12/2009 Full 100.00% 28.73% 31/12/2010 Dissolution Movement Poland SA Poland Full 100.00% 51.59% KS Down Town Senter Norway 31/12/2009 Full 100.00% 28.73% 31/12/2010 Full 100.00% 51.59% 31/12/2010 Dissolution Nancy Bonsecours SCI France Passing KS Down Town Senter II Norway 31/12/2009 qualifying Full 100.00% 51.21% 31/12/2009 Full 100.00% 28.73% thresholds KS Markedet Norway Full 100.00% 28.94% Nerstranda AS Norway Full 100.00% 28.94% 31/12/2010 Disposal 31/12/2010 Merger Kvadrat Drift AS Norway Nerstranda Drift AS Norway 31/12/2009 Full 100.00% 28.73% 31/12/2009 Full 100.00% 28.73% 31/12/2010 Disposal Noblespecialiste France 31/12/2009 Merger L’Emperi SCI France 31/12/2009 Equity 15.00% 7.68% Nordal ANS Norway Prop. 50.00% 14.48% La Française SCI France Prop. 50.00% 25.79% Nordbyen Senterforening AS Norway Full 69.20% 20.04% La Marquayssonne France 31/12/2009 Merger Nordica Holdco AB Sweden Full 56.10% 28.94% La Plaine du Moulin à vent SCI France Prop. 50.00% 25.79% Norsk Automatdrift AS Norway 31/12/2009 Merger Additional Norsk Kjopesenterforvaltning AS Norway Full 100.00% 28.94% 31/12/2010 purchase Full 51.50% 26.57% La Rive SCI France North Man Sverige AB Sweden Full 100.00% 28.94% 31/12/2009 Full 47.30% 24.22% Novak Eiendom AS Norway 31/12/2009 Merger La Rocade SCI France Equity 38.00% 19.61% Novate SARL Luxembourg 31/12/2009 Merger 4 La Rocade Ouest SCI France Equity 36.73% 18.95% Nyiregyhaza Plaza Hungary Full 100.00% 51.59% La Roche Invest SCI France Full 100.00% 51.59% Odysseum Place de France SAS France Prop. 50.00% 25.79% Le Champs de Mais SCI France Equity 40.00% 20.64% Okern Eiendom ANS Norway Prop. 50.00% 14.48% Le Champs des Haies SCI France Full 60.00% 30.95% 31/12/2010 Merger 31/12/2010 Additional Full 100.00% 45.40% Okern Holding AS Norway LC SCI France purchase 31/12/2009 Full 100.00% 28.73% 31/12/2009 Full 60.00% 18.43% Okern Sentrum ANS Norway Prop. 50.00% 14.48% Le Barjac Victor SNC France Full 100.00% 51.59% Okern Sentrum AS Norway Prop. 50.00% 14.48% Le Grand Pré SCI France Full 60.00% 30.95% 31/12/2010 Merger Le Havre Lafayette SNC France Prop. 50.00% 25.79% Okern Sentrum Drift AS Norway 31/12/2009 Full 100.00% 28.73% Le Havre Vauban SNC France Prop. 50.00% 25.79% Os Alle 3 AS Norway Full 100.00% 28.94% Additional 31/12/2010 purchase Full 80.00% 41.27% 31/12/2010 Merger Le Mais SCI France Os Alle Drift AS Norway 31/12/2009 Full 60.00% 30.72% 31/12/2009 Full 100.00% 28.73% Le Plateau des Haies SCI France Full 90.00% 46.43% Osny Invest SCI France Full 57.12% 29.47% Les Bas Champs SCI France Prop. 50.00% 25.79% 31/12/2010 Disposal Ostfoldhallen Drift AS Norway Les Boutiques de Saint Maximin France Equity 42.50% 21.92% 31/12/2009 Full 100.00% 28.73% Les Boutiques d’Osny SCI France Full 67.00% 19.74% Parc de Coquelles SNC France Prop. 50.00% 25.79% Les Cinémas de l’Esplanade SA Belgium Full 100.00% 51.59% Partille Lexby AB Sweden Full 100.00% 28.94% Les Haies de la Haute Pommeraie SCI France Full 53.00% 27.34% Pasteur SNC France Full 100.00% 51.59% Les Jardins des Princes à Boulogne France Full 100.00% 51.59% Czech Billancourt SNC Pilsen Plaza SRO Republic Full 100.00% 51.59% Lille Eiendom AS Norway Full 66.00% 19.11% Place de l’accueil SA Belgium Full 100.00% 51.59% Lokketangen Torv AS Norway 31/12/2009 Merger Pommeraie Parc SC France Full 60.00% 30.95% LP7 SAS France Full 100.00% 51.59% Poznan Plaza SP z.o.o Poland Full 100.00% 51.59% Mass Center Torp AB Sweden Full 100.00% 28.94% Progest France Full 100.00% 51.59% Maximeuble SCI France Full 100.00% 51.59% Proreal SARL France Full 51.00% 26.31% 31/12/2010 Merger Prosjektselskabet af 10.04.2001 APS Denmark Full 100.00% 28.94% Metro Drift AS Norway 31/12/2009 Full 100.00% 28.73% Rebecca SCI France Full 70.00% 36.11% Metro Senter ANS Norway Prop. 50.00% 14.48% Restorens France 31/12/2009 Merger Miskolc 2002 Hungary Full 100.00% 51.59% 31/12/2010 Disposal Reze Sud SA France MittiCity i Karlstad FAB Sweden Full 100.00% 28.94% 31/12/2009 Equity 15.00% 7.68% Molndal Centrum Byggnads FAB Sweden Full 100.00% 28.94% Ruda Slaska Plaza SP z.o.o Poland Full 100.00% 51.59% Molndal Centrum Koljan 1FAB Sweden 31/12/2010 Purchase Full 100.00% 28.94% 31/12/2010 Liquidation Rybnik Plaza SP z.o.o Poland Molndal Centrum Karpen 12 FAB Sweden 31/12/2010 Purchase Full 100.00% 28.94% 31/12/2009 Full 100.00% 51.21%
(*) French subsidiaries whose regulatory supervision falls within the scope of the consolidated Group, in accordance with article 4.1 of CRBF regulation 2000.03. 1 Allocation of BNP Paribas Fortis and BGL BNP Paribas activities to BNP Paribas Group businesses. 2 Simplifi ed consolidation by the equity method (non-material entities). 3 Entities excluded from prudential scope of consolidation. 4 Entities consolidated under the equity method for prudential purposes.
232 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Group Group Group owner- Group owner- voting ship voting ship Change in the scope interest interest Change in the scope interest interest Name Country of consolidation Method (%) (%) Name Country of consolidation Method (%) (%) Sadyba Center SA Poland Full 100.00% 51.59% 31/12/2010 Merger Steen & Strom Eiendomsforvaltning AS Norway Saint Maximin Construction SCI France Full 55.00% 28.37% 31/12/2009 Full 100.00% 28.73% 31/12/2010 Disposal Steen & Strom Holding AB Sweden Full 100.00% 28.94% Sandens Drift AS Norway 31/12/2009 Full 100.00% 28.73% Steen & Strom Holding AS Denmark Full 100.00% 28.94% 31/12/2010 Disposal 31/12/2010 Merger Sandri-Rome SCI France Steen & Strom Invest Amanda Norway 31/12/2009 Equity 15.00% 7.68% Senterdrift AS 31/12/2009 Full 100.00% 28.73% Seco valde SCI France Full 55.00% 28.37% Steen & Strom Invest AS Norway 31/12/2009 Merger Ségécé France Full 100.00% 51.59% 31/12/2010 Merger Steen & Strom Invest Gulskogen Norway Czech Senterdrift AS 31/12/2009 Full 100.00% 28.73% Ségécé Ceska Republika SRO Republic Full 100.00% 51.59% 31/12/2010 Merger Ségécé Espana SLU Spain Full 100.00% 51.59% Steen & Strom Invest Lillestrom Norway Senterdrift AS 31/12/2009 Full 100.00% 28.73% Ségécé Hellas Réal Estate Management Greece Full 100.00% 51.59% SA Steen & Strom Invest Lillestrom Torv AS Norway Full 100.00% 28.94% Ségécé India Private Ltd. India Full 100.00% 51.59% 31/12/2010 Merger Ségécé Italia SRL Italy Full 100.00% 51.59% Steen & Strom Invest Markedet Drift AS Norway 31/12/2009 Full 100.00% 28.73% Ségécé Magyarorszag Hungary Full 100.00% 51.59% 31/12/2010 Disposal Ségécé Polska SP z.o.o Poland Full 100.00% 51.59% Steen & Strom Narvik AS Norway 31/12/2009 Full 100.00% 28.73% Ségécé Portugal SA Portugal Full 100.00% 51.59% Steen & Strom Norge AS Norway Full 100.00% 28.94% Ségécé Slovensko SRO Slovakia Full 100.00% 51.59% Steen & Strom Norges Storste Norway 31/12/2009 Merger 4 31/12/2010 Merger Senterkjede AS Senterdrift Asane Senter AS Norway 31/12/2009 Prop. 49.90% 14.33% Steen & Strom Senterservice AS Norway Full 100.00% 28.94% 31/12/2010 Merger Sjosiden AS Norway Full 100.00% 28.94% Steen & Strom Stavanger Drift AS Norway 31/12/2010 Merger 31/12/2009 Full 100.00% 28.73% Sjosiden Drift AS Norway 31/12/2009 Full 100.00% 28.73% Steen & Strom Sverige AB Sweden Full 100.00% 28.94% Skarer Stormarked AS Norway Merger Storm Holding Norway AS Norway Full 100.00% 28.94% Stovner Senter AS Norway Full 100.00% 28.94% Soaval - Société d’aménagement et de France Full 100.00% 51.59% valorisation de la Gare Saint-Lazare SAS Stovner Senter Holding AS Norway 31/12/2009 Merger 31/12/2010 Liquidation Soccendre SNC France 31/12/2010 Merger 31/12/2009 Full 100.00% 51.21% Stovner Senterdrift AS Norway 31/12/2009 Full 100.00% 28.73% Société des Centres d’Oc et d’Oil - SCOO SC France Full 100.00% 74.03% Svenor AS Norway Full 100.00% 28.94% Société des Centres Toulousains France 31/12/2009 Merger Szeged Plaza Hungary Full 100.00% 51.59% Société civile pour la location du centre commercial régional de Créteil SOLOREC France Full 80.00% 41.27% Szolnok Plaza Hungary Full 100.00% 51.59% Sodevac SNC France Full 100.00% 51.59% 31/12/2010 Disposal Tillertorget Drift AS Norway Sodirev SNC France 31/12/2009 Merger 31/12/2009 Full 100.00% 28.73% Partial Torvbyen Drift AS Norway Full 38.00% 11.00% 31/12/2010 disposal Sogegamar SCI France Torvbyen Senter AS Norway Full 100.00% 28.94% 31/12/2009 Equity 33.12% 16.96% Torvbyen Utvikling AS Norway Full 100.00% 28.94% 31/12/2010 Liquidation Sosnowiec Plaza z.o.o Poland Torvhjornet Lillestrom ANS Norway Full 100.00% 28.94% 31/12/2009 Full 100.00% 51.21% Uj Alba 2002 Hungary Full 100.00% 51.59% Stavanger Storsenter AS Norway Full 100.00% 28.94% Valdebac SCI France 31/12/2010 Incorporation Full 55.00% 28.37% Steen & Strom AS Norway Full 100.00% 28.94% Vannes Coutume SAS France Full 100.00% 51.59% Steen & Strom CenterDrift AS Denmark Full 100.00% 28.94% Vastra Torp Mark AB Sweden Full 100.00% 28.94% Steen & Strom Centerudvikling IV AS Denmark Full 100.00% 28.94% Vintebro Senter DA Norway Full 100.00% 28.94% Steen & Strom Centerudvikling V AS Denmark Full 100.00% 28.94% 31/12/2010 Merger Steen & Strom CenterUdvikling VI AS Denmark Full 100.00% 28.94% Vinterbro Eiendomsdrift AS Norway 31/12/2009 Full 100.00% 28.73% Steen & Strom Centerservice AS (ex- Denmark Full 100.00% 28.94% Steen & Strom CenterUdvikling VII AS) Zalaegerszeg Plaza Hungary Full 100.00% 51.59% Steen & Strom Danmark AS Denmark Full 100.00% 28.89% Steen & Strom Drammen AS Norway 31/12/2009 Merger 31/12/2010 Disposal Steen & Strom Drift AS Norway 31/12/2009 Full 100.00% 28.73%
2010 Registration document and fi nancial report - BNP PARIBAS 233 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
8.c CHANGE IN THE GROUP’S INTEREST AND These transactions led to changes in the Group’s interest and that MINORITY INTERESTS IN THE EQUITY held by minority shareholders in the Group’s equity in respect to the relevant subsidiaries. The same applied as a result of the acquisition by OF SUBSIDIARIES BNP Paribas of the minority shareholders’ holding in UkrSibBank. During 2010, the BNP Paribas Group conducted various internal restructuring transactions in connection with the activities of BNP Paribas Fortis and BGL BNP Paribas.
Internal restructuring that led to a change in minority shareholders’ interest in the equity of subsidiaries 31 December 2010 31 December 2009 Attributable to Attributable to In millions of euros shareholders Minority interests shareholders Minority interests Partial disposal of BNP Paribas Investment Partners to BNP Paribas Fortis & to BGL BNP Paribas 292 (292) - - Total disposal of BNP Paribas Investment Partners BE Holding (previously FIM) to BNP Paribas Investment Partners (269) 269 - - Full disposal of BNP Paribas Luxembourg to BGL BNP Paribas 224 (224) - - 4 Total disposal of Fortis Capital Corporation and its subsidiaries to Banexi holding Corp. (63) 63 - - Disposal of Fortis Bank Branches’ assets to BNP Paribas branches at same location (203) 203 - - Other (4) 4 (17) 17 TOTAL (23) 23 (17) 17
234 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Acquisitions of additional interests and partial sales of interests leading to changes in minority interests in the equity of subsidiaries 31 December 2010 31 December 2009 Attributable to Attributable to In millions of euros shareholders Minority interests shareholders Minority interests Ukrsibbank (14) (130) (37) (51) During 2009, following the acquisition of successive additional interests, BNP Paribas’s percentage interest in Ukrsibbank went up from 51% to 81.41% On 1rst October 2010, BNP Paribas subscribed to the full amount of UkrSibbank’s capital increase then bought out minority shareholders interests, lifting its percentage interest in the subsidiary to 100%. Fauchier (16) 5 During the fi rst quarter of 2010, BNP Paribas Investment Partners bought out minority shareholders interests representing 12.5% of the capital, lifting its percentage interest to 87.5% Findomestic Banca (73) 297 BNP Paribas Personal Finance bought out minority 4 shareholders interests representing 25% of the capital, lifting its percentage interest to 75% SCS Bègles Arcin 24 93 The Klépierre group purchased 2% of SCS Bègles Arcin, lifting its percentage interest to 52% CGI 23 62 The Klépierre group acquired 21.3% of CGI, lifting its percentage interest to 71.3% Klépierre 26 43 Various Group companies carried out partial disposals of Klépierre shares Other (23) (12) (3) 62 TOTAL (53) (137) (40) 506
2010 Registration document and fi nancial report - BNP PARIBAS 235 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
In connection with the acquisition of certain entities, the Group has 8.d BUSINESS COMBINATIONS granted minority shareholders put options on their holdings at a predetermined price. Business combinations realised in 2010 The total value of these obligations, which are recorded as a reduction in shareholders’ equity, amounted to EUR 161 million at 31 December 2010, Antin Epargne Pension down from EUR 308 million at 31 December 2009. On 30 April 2010, BNP Paribas Assurance fi nalised the acquisition of Dexia Epargne Pension, a Dexia Group subsidiary specialising in high- end insurance. The company’s products and services, aimed at banking partners and independent wealth management advisers, will be sold under the “Antin Epargne Pension” brand instead of “Dexia Epargne Pension”. The Antin Epargne Pension Group has been fully consolidated since 30 June 2010 and its contribution to the Group’s full-year results is not material.
In millions of euros Acquired Acquisition Net cash Total balance sheet at Acquired subsidiary Segment Country percentage price infl ow the acquisition date (1) Antin Epargne Pension Investment 4 Solution France 100% - 72 4,475 (1) Provisional data at market value or equivalent.
Business combinations realised in 2009 The acquisition cost of the Fortis Bank SA and BGL SA shares amounted to EUR 5,703 million and EUR 562 million respectively, including transaction Acquisition of Fortis Bank SA (BNP Paribas Fortis) costs, and was determined on the basis of the BNP Paribas share price and BGL SA (BGL BNP Paribas) on the date of the contributions, i.e. EUR 46.69 for the share issued Under the Protocol Agreements entered into on 10 October 2008 and on 12 May 2009 and EUR 45.98 for the shares issued on 13 May 2009. 8 March 2009, BNP Paribas acquired Fortis Bank SA and BGL SA via A description of the new share issues made to pay for each of the four contributions, two from the Belgian government and two from the contributions is provided in note 8.a “Changes in share capital and Luxembourg government. earnings per share”. The contributions were completed on 12 and 13 May 2009, following The operation also included three transactions completed on the same which: date as the fi rst contribution:
■ BNP Paribas owns 74.93% of the share capital and voting rights of ■ the acquisition by Fortis Bank SA from Fortis Insurance N.V. of 25% Fortis Bank SA (which itself has a 50% interest in the share capital of the share capital plus one share of AG Insurance at a price of EUR plus one share of BGL SA) and a direct 15.96% interest in the share 1,375 million; capital and voting rights of BGL SA; ■ the acquisition by BNP Paribas of 11.76% of the share capital (i.e. ■ the Belgian government (through Société Fédérale de Participations et EUR 200 million) of Royal Park Investments SA/NV (RPI), a defeasance d’Investissement (SFPI), a Belgian-law public interest société anonyme vehicle that had purchased certain structured loans from Fortis Bank acting on behalf of the Belgian government) owns a blocking minority SA at a total price of EUR 11.8 billion. The rest of RPI’s share capital interest of 25% plus one share of Fortis Bank SA and the Luxembourg is 43.53%-owned by the Belgian government and 44.71% by Fortis government owns a blocking minority interest of 34% of BGL SA; SA/NV and Fortis N.V. BNP Paribas also provided EUR 519 million of ■ the Belgian government (through SFPI) owns 9.83% of the share capital the acquisition debt (i.e. 10% of the senior debt) and the balance was and 11.59% of the voting rights of BNP Paribas and the Luxembourg provided by Fortis Bank SA, comprising EUR 4,891 million in super government owns 0.99% of the share capital and 1.17% of the voting senior debt and EUR 4,668 million in senior debt, the latter being rights of BNP Paribas. The Belgian government has undertaken to hold guaranteed by the Belgian government; the 88,235,294 BNP Paribas shares received in consideration for the ■ a loan of EUR 1,000 million made by Fortis Bank to Fortis SA/NV, fi rst of its two contributions until 10 October 2010 and the Luxembourg guaranteed by the Belgian government, principally to fi nance the government has undertaken to hold 50% of the BNP Paribas shares acquisition of its interest in RPI. received in consideration for its two contributions (i.e. 6,108,774 The acquisition of Fortis Bank SA and BGL SA enables BNP Paribas to BNP Paribas shares) until 23 October 2009. further expand its integrated banking model in Europe, adding two new domestic markets – Belgium and Luxembourg – to its existing domestic markets in France and Italy.
236 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Fortis Bank SA and BGL SA both have activities in retail banking, private ■ measurement of loans, securities and other assets, as well as fi nancial banking, asset management, and corporate and investment banking: and other liabilities, at market value or its equivalent (EUR (3,293) million) at the acquisition date; ■ the retail banking business provides fi nancial services to individuals, the self-employed, the professions and small businesses. It has a ■ amortisation of existing goodwill and impairment of some other network of 1,064 branches and three million customers in Belgium, intangible assets (EUR (2,526) million), as well as recognition of the 37 branches and about 280,000 customers in Luxembourg, and branch Fortis and BGL brands as intangible assets (EUR 50 million and EUR networks in Poland, Turkey and France. In addition Fortis Bank SA and 10 million respectively), making a total of EUR (2,466) million; its subsidiaries have a postal bank business in Belgium (Banque de ■ measurement of market transactions and investments in variable- La Poste) and Ireland (Postbank), enabling them to provide a broader income securities in accordance with the methods used by the range of products through these respective postal networks. Fortis BNP Paribas Group (EUR (767) million); Bank SA and its subsidiaries have more than 2,000 outlets in Europe; ■ employee benefi ts (EUR (1,595) million), mainly to take into account ■ private banking offers integrated, international wealth management the impact of actuarial inputs on the acquisition date on the solutions to high-net-worth individuals, their companies and measurement of post-employment benefi ts and retirement-related advisers. Assets under management amounted to EUR 43 billion at contingent liabilities; 31 December 2008. Fortis Bank SA and BGL SA are fi rst-class players ■ certain other assets, mainly real estate (EUR 193 million); in private banking in both Belgium and Luxembourg and have a well- ■ established position in Switzerland; recognition of tax assets, mainly related to tax loss carryforwards and temporary differences, net of contingent liabilities (EUR 1,217 million), ■ in asset management, Fortis Bank SA operates mainly through its as well as the tax effects of the restatements made (EUR 2,661 million), subsidiary Fortis Investments. Its activities range from institutional making a total of EUR 3,878 million. asset management to the development and management of mutual funds. Assets under management amounted to EUR 170 billion at The Fortis and BGL brands were recognised as intangible assets upon 4 31 December 2008. Fortis Investments is the fi fth largest European allocation of the cost of the acquisition. The brand value was determined asset manager, excluding money market funds; in line with market practices for this type of asset in the banking sector and by comparison with listed banks of comparable size, taking account ■ corporate and investment banking provides a broad range of fi nancial of recent developments in the Fortis brand’s reputation and particularly products and services tailored to the needs of European-based mid- the circumstances that led to the BNP Paribas Group acquiring control. sized companies, as well as large corporates and institutional clients, with a strong focus on Europe and some areas of North America and BNP Paribas did not recognise an intangible asset for customer Asia. Fortis Bank SA has a high-quality franchise and attractive niche relationships corresponding to account and deposit agreements entered positions in these markets. It will round out BNP Paribas’ current into with customers. Fortis does not possess any legal or contractual franchise in these business activities. The risk management policies rights giving it control over deposited funds. The level of these funds currently in place at BNP Paribas will be rolled out to Fortis Bank SA’s depends solely on the behaviour of Fortis’ customers, with a major round corporate and investment banking activities. of fund withdrawals being seen in the period of crisis preceding the acquisition of Fortis by BNP Paribas. In addition, the conditions laid down The consolidated balance sheets of Fortis Bank SA and BGL were restated by the standard for the recognition of such assets were not satisfi ed. on the date of acquisition to comply with the accounting methods used In European banks’ business model, the advantage deriving from these by the BNP Paribas Group. The acquisition was accounted for using deposits is embedded in a set of products and services that contribute the purchase method as required by IFRS (see note 1.b.4 “Business towards the fi nancial equilibrium of the range offered to customers, such combinations and measurement of goodwill”). as registrar services that are not billed and property loans that carry low The restatements amounted to EUR (6,765) million after the tax effect charges. As a result, these advantages are not separable. In addition, no and on a 100% basis. They mainly concerned: isolated transaction was identifi ed in similar assets. Given the absence ■ specifi c and collective loan impairment provisions, related mainly of a reference price in a comparable market, this intangible asset cannot to valuation methods, and provisions for disputes and contingent be measured reliably. liabilities, totalling EUR (2,715) million; These restatements led the Group to reduce the shareholders’ equity of Fortis Bank SA, BGL SA and their subsidiaries by EUR 5,041 million on the acquisition date, thereby generating negative goodwill of EUR 770 million.
2010 Registration document and fi nancial report - BNP PARIBAS 237 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
The table below shows the consolidated IFRS balance sheet for Fortis Bank SA, BGL SA and their subsidiaries at 30 April 2009 before and after the restatements made by the Group in accordance with the provisions of IFRS on business combinations and with the accounting policies applied by the BNP Paribas Group: 30 April 2009 30 April 2009 In millions of euros After restatements Before restatements ASSETS Financial assets at fair value through profi t or loss 107,125 109,366 Available-for-sale assets 69,692 96,526 Loans and receivables due from credit institutions 50,763 39,793 Loans and receivables due from customers 231,786 213,990 Held-to-maturity fi nancial assets - 3,553 Property, plant and equipment and intangible assets 3,889 3,657 Goodwill - 1,931 Other assets 55,767 51,420 TOTAL ASSETS 519,022 520,236 LIABILITIES AND EQUITY 4 Financial liabilities at fair value through profi t or loss 110,868 111,779 Due to credit institutions 110,550 110,720 Due to customers 203,214 202,616 Debt securities 39,384 39,177 Subordinated debt 18,090 18,246 Other liabilities 25,481 19,904 TOTAL LIABILITIES 507,587 502,442 TOTAL CONSOLIDATED EQUITY 11,435 17,794 TOTAL LIABILITIES AND EQUITY 519,022 520,236
Fortis Bank SA, BGL SA and their subsidiaries have been fully consolidated The acquisition had the effect of increasing the BNP Paribas Group’s net since their acquisition date. Their contribution to the BNP Paribas Group’s cash by EUR 3,470 million in 2009. net income in 2009 since their acquisition date was EUR 945 million before minority interests and EUR 682 million after minority interests.
238 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
The table below shows the contribution which Fortis Bank SA, BGL SA and their subsidiaries would have made in the fi rst half of 2009 had the acquisition taken place on 1 January 2009. These items refl ect an estimate of the impacts that the acquisition restatements to the balance sheet of these two sub- groups would have had on the period from 1st January to the effective date of acquisition had they been made on 1st January 2009.
In millions of euros Year to 31 Dec. 2009 Interest income 13,131 Interest expense (7,935) Commission income 3,120 Commission expense (1,084) Net gain/loss on fi nancial instruments at fair value through profi t or loss 483 Net gain/loss on available-for-sale fi nancial assets 71 Income from other activities 338 Expense on other activities (95) REVENUES 8,029 Operating expense (4,755) Depreciation, amortisation and impairment of property, plant and equipment and intangible assets (333) GROSS OPERATING INCOME 2,941 Cost of risk (1,560) 4 OPERATING INCOME 1,381 Share of earnings of associates 84 Net gain on non-current assets 34 Goodwill (4) PRE-TAX INCOME 1,495 Corporate income tax (418) NET INCOME 1,077 Minority interests 328 NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS 749
This table, published with the consolidated fi nancial statements at 30 June 2009, has been revised to take into account the adjustments made since then to the initial measurement of the identifi able assets, liabilities, contingent assets and liabilities of the companies acquired.
The restatements made to the income statement of Fortis Bank SA, BGL the pro forma fi gures were restated to simulate the effects of these SA and their subsidiaries for the period preceding the date of effective reversals based on the opening balance sheet adjustments at the acquisition of control were as follows: effective acquisition date over the period from 1st January until the effective acquisition date. ■ alignment of the income statement of the sub-groups with the presentation format adopted by the BNP Paribas Group; In the preparation of the pro forma income statement, the impact of these restatements on the current income tax charge and on the portion ■ identifi cation within the contributions made by the sub-groups of one- attributable to minority interests was also taken into account. off items that would not have been recognised had the acquisition taken place on 1st January 2009; The results generated by the By convention, it was deemed that the income statement of Fortis structured loan portfolio transferred to the Royal Park Investments Bank SA and BGL SA and their subsidiaries reflects the changes in SA/NV defeasance vehicle until the date of their transfer, as well as market conditions over the period preceding the acquisition of control. any gains or losses on the disposal of this portfolio, were not included Accordingly, the effects of convergence in the accounting methods in the pro forma income statement; of these entities with the BNP Paribas Group’s accounting policies ■ simulation of the reversal effects of the adjustments in the sub-groups’ concerning adjustments linked to market activities did not lead to a opening balance sheet in accordance with the purchase accounting specifi c restatement in the determination of pro forma data. method required by IFRS 3. These adjustments predominantly include Lastly, no restatements were made in respect to reciprocal transactions. the measurement at fair value at the acquisition date of the portfolios This restatement did not have an impact on net income or on the key in the banking intermediation book. Since the task of measuring the income statement items, but may affect the individual presentation of opening balance sheet had not been completed at 1st January 2009, income and expense items together determining revenues.
2010 Registration document and fi nancial report - BNP PARIBAS 239 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
➤ OTHER BUSINESS COMBINATIONS IN 2009
In millions of euros Balance sheet key fi gure at the acquisition date Acquired Acquired Acquisition Net cash subsidiaries Segment Country percentage price Goodwill (1) infl ow Assets Liabilities Group Bank Insinger de Beaufort Loans and receivables Investment due from credit Amounts due Solution Netherlands 58% 158 103 5 institutions 176 to customers 352 Loans and receivables due from customers 111 Credifi n Banco SA Loans and Retail receivables due Due to credit Banking Portugal 50% 148 (3) 93 (3) (146) (3) from customers 597 institutions (2) 526 Findomestic Loans and 4 Retail receivables due Due to credit Banking Italia 25% 517 (3) 348 (3) (404) (3) from customers 10,421 institutions 8,502 Debt securities961 Subordinated Debt 152 (1) In euro equivalent value at the year-end. (2) Debt mostly subscribed by BNP Paribas SA. (3) Data corresponding to the additional interest acquired.
Bank Insinger de Beaufort Group control of Findomestic by acquiring an additional 25% interest on top of In April 2009, BNP Paribas Wealth Management International Paris the 50% stake it already held. Findomestic has been fully consolidated as acquired 58% of the Insinger de Beaufort Group, which comprises of that date. The impact of this additional acquisition on the BNP Paribas companies specialized in wealth management in the Netherlands, Group’s net income was not material in 2009. United Kingdom and Switzerland, with EUR 6.4 billion of assets under management for high-net-worth individuals. The Insinger de Beaufort Group, which comprises nine consolidated 8.e COMPENSATION AND BENEFITS entities, has been fully consolidated as of its acquisition date. Its AWARDED TO THE GROUP’S CORPORATE contribution to the BNP Paribas Group’s net income in 2009 was not OFFICERS material. Following the acquisition, Bank Insinger de Beaufort N.V. absorbed Compensation and benefits policy relating to Nachenius Tjeenk & Co N.V., an entity already owned by BNP Paribas the Group’s corporate officers Wealth Management International Paris with a similar business in the Netherlands to that of Bank Insinger de Beaufort. Compensation paid to the Group’s corporate officers Credifin Banco SA The compensation paid to the Group’s corporate offi cers is determined by At end of May 2009, Banco Cetelem Portugal acquired 100% of Credifi n the method recommended by the Compensation Committee and approved Banco SA from the LaSer group, giving the BNP Paribas Group control. by the Board of Directors. Credifin Banco S.A. has been fully consolidated as of that date. Its This compensation comprises both a fi xed and a variable component, the contribution to the BNP Paribas Group’s net income in 2009 was not levels of which are determined using market benchmarks established by material. fi rms specialised in surveys of executive remuneration. Findomestic Michel Pébereau, Baudouin Prot and Georges Chodron de Courcel do On 10 December 2009, following the authorisation granted by the Bank not receive any compensation from Group companies other than of Italy, BNP Paribas Personal Finance, a BNP Paribas subsidiary, acquired BNP Paribas SA.
240 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
On 3 August 2009, the Board of Directors stated the opinion that a special The criteria related to the risk and liquidity policy relate solely to the allowance could be paid to Jean-Laurent Bonnafé by BNP Paribas Fortis Chief Executive Offi cer and Chief Operating Offi cers. The proportion of for his responsibilities as Chief Executive Offi cer. On 11 May 2010, the variable compensation corresponding to these criteria depends on the Board of Directors of BNP Paribas Fortis granted Jean-Laurent Bonnafé a achievement of several measurable and predetermined objectives. It fi xed salary of EUR 200,000, with effect from 1 January 2010. may be granted only where the variable compensation linked to Group performance indicators is at least equal to the corresponding proportion The variable portion of corporate offi cers’ compensation is determined of the target compensation. based on a target bonus calculated as a proportion of their fi xed salary. It fl uctuates depending on criteria linked to the Group’s performance, The Board of Directors of BNP Paribas Fortis may grant variable from the managerial performance of corporate offi cers and the Board compensation to Jean-Laurent Bonnafé in consideration for his of Directors’ assessment of BNP Paribas’ risk and liquidity policy. The performance and achievements. The Board of Directors of BNP Paribas variable portion is intended to refl ect the effective contribution made ensures that Jean-Laurent Bonnafé’s overall compensation is consistent by corporate offi cers to the success of BNP Paribas, in relation to the with the performance of the businesses for which he is responsible based Chairman, notably in respect of the duties he performs pursuant to the on the criteria applicable to all corporate offi cers. Internal Rules that do not relate exclusively to the organisation and Each of the individual components of corporate offi cers’ compensation functioning of the Board, and in relation to the Chief Executive Offi cer is capped at a percentage of their fi xed salary. The Board of Directors and Chief Operating Offi cers, notably in respect to their respective duties ensures that changes in the compensation granted to corporate offi cers as executives of an international fi nancial services group. are consistent with each of the criteria stated above and, first and Group performance criteria account for 75% of the target variable foremost, the trend in the Group’s earnings. It reports on this matter to compensation and is used to calculate the corresponding portion of the the Shareholders’ General Meeting. variable remuneration based on the change in the relevant indicators. Part of the variable portion of corporate officers’ compensation is The variable portion of compensation linked to personal criteria is limited deferred, indexed to the share price and subject to conditions in line 4 to 25% of the target variable compensation. with the arrangements laid down by the Board of Directors. ■ Chairman and Chief Executive Offi cer Post-employment benefits ■ Change in earnings per share (37.5% of target variable compensation). Termination benefits
■ Achievement of the Group’s budgeted gross operating income (37.5% Corporate offi cers are not entitled to any contractual compensation on of target variable compensation). termination of offi ce. ■ Chief Operating Offi cers Retirement bonuses ■ Change in earnings per share (18.75% of target variable Michel Pébereau is not entitled to a retirement bonus. Baudouin Prot compensation). (Chief Executive Offi cer), Georges Chodron de Courcel and Jean-Laurent
■ Achievement of the Group’s budgeted gross operating income Bonnafé (Chief Operating Offi cers) are entitled under their employment (18.75% of target variable compensation). contracts (1) to the standard retirement bonus benefi ts awarded to all BNP Paribas SA employees. Under this standard scheme, employees ■ Change in net income before tax of businesses for which they are responsible (18.75% of target variable compensation). receive a bonus on retirement from the Group of up to 11.66 months’ basic salary depending on their initial contractual position and length ■ Achievement of budgeted gross operating income of businesses for of service at their retirement date. The bonus is capped at EUR 14,112, which they are responsible (18.75% of target variable compensation). excluding the provisions of the relevant collective bargaining agreement, Personal objective-based criteria concern managerial performance as which may apply above this amount. assessed by the Board of Directors in terms of foresight, decision-making (2) and leadership skills: Supplementary pension plans The defi ned-benefi t plans previously granted to Group executives formerly ■ foresight: defi ne a vision, prepare for the future, foster a spirit of employed by BNP, Paribas or Compagnie Bancaire have all been converted innovation, carry out succession planning for and open up the into top-up type schemes. The amounts allocated to the benefi ciaries international horizons of senior executives; were fi xed when the previous schemes were closed to new entrants. ■ decision-making: determine, with the relevant managers, and take the requisite measures for the Group’s development, its internal effi ciency A similar procedure was applied to Michel Pébereau (Chairman of the and the adequacy of its risk management, internal control and capital Board of Directors), Baudouin Prot (Chief Executive Offi cer) and Georges management policy; Chodron de Courcel (Chief Operating Officer). Pursuant to Articles L. 137.11 and R. 137.16 of the French Social Security Code, Michel ■ leadership: recognise behaviour consistent with the Group’s values Pébereau, Baudouin Prot and Georges Chodron de Courcel now belong to a (commitment, ambition, creativity, responsiveness). Promote contingent collective top-up pension plan. Under this plan, their pensions initiative-taking and internal cooperation. Instil a culture of change will be calculated (subject to their still being part of the Group on and performance. retirement) on the basis of the fi xed and variable remuneration received in 1999 and 2000, with no possibility of acquiring any subsequent rights.
(1) Baudouin Prot’s employment contract: see Chairman’s report on corporate governance (Section 4.c). (2) AFEP-MEDEF Corporate Governance Code (point 20-2-5).
2010 Registration document and fi nancial report - BNP PARIBAS 241 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
The amount of retirement benefi ts, including the pensions paid out by The benefits deriving from the pension schemes described above the general French Social Security scheme and the ARRCO and AGIRC have always been taken into account by the Board of Directors when top-up schemes, plus any additional banking industry pension arising determining the overall compensation of corporate offi cers. During 2009, from the industry-wide agreement that took effect on 1 January 1994 the Board of Directors formally recorded that this plan was compliant and pension rights acquired as a result of payments by the employer with the provisions of the AFEP-MEDEF Corporate Governance Code. into top-up funded schemes, is capped at 50% of the above-mentioned Welfare benefit plans remuneration amounts. The Chairman of the Board of Directors, the Chief Executive Offi cer and These retirement benefi ts will be revalued from 1 January 2002 until the Chief Operating Offi cers are entitled to the same flexible welfare their actual payment date, based on the average annual rate of increase benefi ts (death and disability cover, as well as the common healthcare in pension benefi ts paid by the French Social Security, ARRCO and AGIRC benefi t scheme) as all BNP Paribas SA employees and corporate offi cers. schemes. The increase in potential pension rights for 2010 will be limited to the effects of this revaluation. On payment of the benefi ts, the top-up They are also entitled to the same benefits under the Garantie Vie pensions will be equal to the differential between these revalued amounts Professionnelle Accidents death/disability cover plan as all BNP Paribas and the pension benefi ts provided by the above-mentioned general and SA employees, and to the supplementary plan set up for members of top-up schemes. Once the amount of these top-up benefi ts has been the Group’s Executive Committee, which pays out additional capital fi nally determined, the benefi t will then be indexed to the growth rate of EUR 1.10 million in the event of work-related death or total and in the benefi t value per point under the AGIRC scheme. permanent disability. These obligations were covered by provisions recorded by Banque If Baudouin Prot dies before the age of 60, his heirs will receive Nationale de Paris. The amount of these provisions was adjusted when compensation under an insurance policy. The premium applicable under these legacy plans were closed and the obligations transferred to an this policy is paid by the Group and treated in accordance with the social external insurance company. security rules applicable to employers’ contributions to top-up welfare 4 schemes in France. The Chairman of the Board of Directors, the Chief Executive Offi cer and the Chief Operating Offi cers belong to the defi ned-contribution pension plan set up for all BNP Paribas SA employees, in accordance with Article 83 of the French General Tax Code.
Benefi ts or payments due or likely to fall due owing to the cessation Payment under Employment contract Top-up pension plan or change in duties a no-compete clause
Yes No Yes No Yes No Yes No M. Michel PEBEREAU ✓✓ ✓ ✓ M. Baudouin PROT ✓ (1) ✓ ✓ (3) ✓ M. Jean-Laurent BONNAFE ✓ ✓ (2) ✓ (3) ✓ M. Georges CHODRON de COURCEL ✓ ✓ ✓ (3) ✓ (1) See the Chairman’s report on the manner of the preparation and organisation of the work of the Board. Section 4.c. (2) Pension scheme under Article 83 of the French General Tax Code for the benefi t of all BNP Paribas SA’s employees. (3) See above Post-employment benefi ts. Retirement bonuses.
242 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
The table below shows gross compensation payable for the year to 31 December 2010, including benefi ts in kind and Directors’ fees for 2010. Compensation payable for 2010 Compensation Directors’ Benefi ts in TOTAL In euros Fixed (1) Variable (2) Deferred (3) fees (4) kind (5) Compensation Michel PEBEREAU Chairman of the Board of Directors 2010 700,000 (6) (6) 37,160 4,124 741,284 (2009) (700,000) (280,000) (280,000) (29,728) (3,598) (1,293,326) Baudouin PROT Chief Executive Offi cer 2010 950,000 (6) (6) 84,907 4,055 1,038,962 (2009) (950,000) (712,500) (712,500) (90,318) (5,212) (2,470,530) Georges CHODRON de COURCEL Chief Operating Offi cer 2010 600,000 (6) (6) 115,225 3,840 719,065 (2009) (600,000) (450,000) (450,000) (112,302) (4,273) (1,616,575) Jean-Laurent BONNAFE Chief Operating Offi cer 2010 (by BNP Paribas SA) 600,000 (6) (6) 52,839 3,333 656,172 4 2010 (by BNP Paribas Fortis) 200,000 (6) (6) 24,031 - 224,031 (2009) (563,172) (633,926) (211,309) (51,638) (3,329) (1,463,374) Total compensation payable to the Group’s corporate offi cers for 2010 3,379,514 (for 2009) (6,843,805) (1) Compensation actually paid in 2010. (2) & (3) Variable compensation payable for 2009 and 2010 respectively. (3) Variable compensation granted in 2009 to corporate offi cers is deferred over the 2011, 2012 and 2013 fi nancial years at a rate of 50% for Michel Pébereau, Baudouin Prot and Georges Chodron de Courcel and 25% for Jean-Laurent Bonnafé. The deferred amounts are indexed to the value of the share. Payment of these amounts is subject to satisfaction of a condition based on return on equity for each year under consideration. (4) Michel Pébereau does not receive any Directors’ fees from any Group companies other than from BNP Paribas SA. Baudouin Prot does not receive any Directors’ fees from any Group companies other than from BNP Paribas SA and Erbé. Directors’ fees received by the Chief Executive Offi cer from Erbé are deducted from his variable compensation. Jean-Laurent Bonnafé does not receive any Directors’ fees from any Group companies other than from BNP Paribas SA, BNP Paribas Fortis, BNL and Personal Finance. The Directors’ fees received by Jean-Laurent Bonnafé in respect of BNL and Personal Finance are deducted from his variable compensation. Georges Chodron de Courcel does not receive any Directors’ fees from any Group companies other than from BNP Paribas Suisse, Erbé and BNP Paribas Fortis. The Directors’ fees received by Georges Chodron de Courcel from these companies are deducted from his variable compensation. (5) The Chairman of the Board of Directors, the Chief Executive Offi cer and the Chief Operating Offi cers each have a company car and a mobile telephone. (6) At the date of this document: ■ BNP Paribas’ Board of Directors has not defi ned the variable portion of corporate offi cers’ compensation in respect of 2010. ■ BNP Paribas Fortis’ Board of Directors has not defi ned the variable portion of Mr Bonnafé’s compensation in respect of 2010. The Board of Directors’ decisions will be published in an update of the Registration document and this report in due course.
2010 Registration document and fi nancial report - BNP PARIBAS 243 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
The table below shows gross compensation paid for the year to 31 December 2010, including benefi ts in kind and Directors’ fees. The variable compensation paid in 2010 relates to 2009.
Compensation paid in 2010 Compensation Benefi ts in TOTAL In euros Fixed Variable (1) Deferred Directors’ fees kind Compensation (2) Michel PEBEREAU Chairman of the Board of Directors 2010 700,000 280,000 - 37,160 4,124 1,021,284 (2009) (700,000) - - (29,728) (3,598) (733,326) Baudouin PROT Chief Executive Offi cer 2010 950,000 651,910 - 84,907 4,055 1,690,872 (2009) (950,000) - - (90,318) (5,212) (1,045,530) Georges CHODRON de COURCEL Chief Operating Offi cer 2010 600,000 337,698 - 115,225 3,840 1,056,763 (2009) (600,000) - - (112,302) (4,273) (716,575) Jean-Laurent BONNAFE 4 Chief Operating Offi cer 2010 (by BNP Paribas SA) 600,000 593,432 36,251 (3) 52,839 3,333 1,285,855 2010 (by BNP Paribas Fortis) 200,000 - - 24,031 - 224,031 (2009) (563,172) (602,876) (39,896) (3) (51,638) (3,329) (1,260,911) Total compensation paid to the Group’s corporate offi cers for 2010 5,278,805 (for 2009) (3,756,342) (1) Baudouin Prot’s variable compensation paid in 2010 in respect of 2009 was reduced by EUR 60,590, representing the recovery of Directors’ fees received in 2009. Georges Chodron de Courcel’s variable compensation paid in 2010 in respect of 2009 was reduced by EUR 112,302, representing the recovery of Directors’ fees received in 2009. Jean-Laurent Bonnafé’s variable compensation paid in 2010 in respect of 2009 was reduced by EUR 40,494, representing the recovery of Directors’ fees received in 2009. (2) The average payroll tax rate on this compensation in 2010 was 33.8% (34.9% in 2009). (3) Variable compensation received for the duties performed by Jean-Laurent Bonnafé prior to his appointment as a corporate offi cer on 1 September 2008.
244 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
➤ BENEFITS AWARDED TO THE CORPORATE OFFICERS
Benefi ts awarded to the Group’s corporate offi cers 2010 2009 Post-employment benefi ts Retirement bonuses Present value of the benefi t obligation 516,531 € 496,031 € Contingent collective defi ned-benefi t top-up pension plan Total present value of the benefi t obligation 30.7 M€ (1) 29.5 M€ (1) Defi ned contribution pension plan Contributions paid by the Company during the year 1,524 € 1,510 € Welfare benefi ts Flexible personal risk plan Premiums paid by the Company during the year 10,401 € 10,992 € Garantie Vie Professionnelle Accidents death/disability cover plan Premiums paid by the Company during the year 7,763 € 8,095 € Supplementary personal risk plan Premiums paid by the Company during the year 115,553 € 84,212 € 4 (1) Excluding the additional contribution of 30%.
The amount of supplementary pension rights is fi xed. The change in the total present value of obligations between 2009 and 2010 refl ects the discounting charge for the year, as well as the update of the assumptions underpinning the calculations.
➤ DIRECTORS’ FEES PAID TO MEMBERS OF THE BOARD OF DIRECTORS
In euros Director’s fees paid in 2010 Director’s fees paid in 2009 M. PEBEREAU 37,160 29,728 P. AUGUSTE 46,503 34,117 C. BEBEAR 35,568 31,746 J.L. BEFFA 28,914 33,055 S. BERGER 44,592 32,913 J.L. BONNAFE 12,918 J.M. GIANNO 45,442 35,178 F. GRAPPOTTE 71,696 55,312 A. JOLY 27,781 D. KESSLER 59,669 35,951 M. KUNEVA 9,202 J.F. LEPETIT 44,380 34,117 L. PARISOT 39,071 28,383 H. PLOIX 46,503 35,178 B. PROT 37,160 29,728 L. SCHWEITZER 60,654 47,915 M. TILMANT 42,469 2,654 E. VAN BROEKHOVEN 44,592 2,654 D. WEBER-REY 47,034 36,098 TOTAL 753,527 532,509
2010 Registration document and fi nancial report - BNP PARIBAS 245 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Stock subscription option plans During 2008, the Board of Directors stated its intention of applying all the provisions of the AFEP-MEDEF Corporate Governance Code concerning Under the authorisations granted by the Shareholders’ General options awarded to corporate offi cers. On 27 March 2009, Michel Pébereau Meetings, BNP Paribas has set up a Global Share-based Incentive Plan, told the shareholders of BNP Paribas at an Extraordinary General Meeting the characteristics of which are described in the note on salaries and that corporate offi cers would not receive any stock subscription options employee benefi ts (share-based payment). in 2009. Upon the redemption of the preferred shares subscribed by The provisions of the plan were approved by the Board of Directors and Société de Prise de Participation de l’Etat, BNP Paribas maintained the apply in full to the corporate offi cers. commitments given to the French authorities, in connection with the French economic stimulus plan, with regard to the grant of stock options to corporate offi cers. Accordingly, the corporate offi cers did not receive any stock subscription options in 2010.
➤ OPTIONS GRANTED AND EXERCISED IN 2010
Individual allocation valuation
Stock subscription as a Individual options granted to and/or Exercise percentage of allocation as a exercised by the Group’s Number of price Plan expiry the recognised percentage of corporate offi cers options (in euros) Grant date date in euros expense (2) share capital OPTIONS GRANTED IN 2010 (1) ------4 OPTIONS EXERCISED IN 2010 Michel PEBEREAU 80,000 47.37 15/05/2001 14/05/2011 Baudouin PROT 50,000 47.37 15/05/2001 14/05/2011 OPTIONS GRANTED IN 2009 (1) ------OPTIONS EXERCISED IN 2009 Michel PEBEREAU 223,855 43.67 22/12/1999 22/12/2009 Baudouin PROT 132,296 43.67 22/12/1999 22/12/2009 (1) No option was granted in respect of the 2009 and 2010 fi nancial years. (2) Percentage of the expense recognised for the Global Share-based Incentive Plan, which combines stock options with share awards.
246 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
➤ SUMMARY OF COMPENSATION AND STOCK OPTIONS PAID TO INDIVIDUAL CORPORATE OFFICERS
In euros 2010 2009 Michel PEBEREAU Chairman of the Board of Directors Compensation for the year 741,284 (1) 1,293,326 Value of stock options granted during the year Nil Nil TOTAL 741,284 1,293,326 Baudouin PROT Chief Executive Offi cer Compensation for the year 1,038,962 (1) 2,470,530 Value of stock options granted during the year Nil Nil TOTAL 1,038,962 2,470,530 Georges CHODRON de COURCEL Chief Operating Offi cer Compensation for the year 719,065 (1) 1,616,575 Value of stock options granted during the year Nil Nil 4 TOTAL 719,065 1,616,575 Jean-Laurent BONNAFE Chief Operating Offi cer Compensation for the year 880,203 (1) 1,463,374 Value of stock options granted during the year Nil Nil TOTAL 880,203 1,463,374 (1) At the date of this document: ■ BNP Paribas’ Board of Directors has not defi ned the variable portion of corporate offi cers’ compensation in respect of 2010; ■ BNP Paribas Fortis’ Board of Directors has not defi ned the variable portion of Mr Bonnafé’s compensation in respect of 2010. The Board of Directors’ decisions will be published in an update of the Registration document and this report in due course.
The table shows the number of outstanding options held by the Group’s corporate offi cers at 31 December 2010. Originating company BNP BNP Paribas BNP Paribas BNP Paribas BNP Paribas BNP Paribas BNP Paribas BNP Paribas Date of grant 15/05/2001 21/03/2003 25/03/2005 05/04/2006 08/03/2007 18/04/2008 08/04/2009 05/03/2010 Michel PEBEREAU 147,571 232,717 103,418 102,521 51,265 51,265 Nil Nil Baudouin PROT 94,018 201,688 155,125 184,537 174,300 174,299 Nil Nil Georges CHODRON de COURCEL - 4,675 62,052 92,269 92,277 102,529 Nil Nil Jean-Laurent BONNAFE - - 41,368 51,261 61,518 61,517 Nil Nil NUMBER OF OPTIONS OUTSTANDING AT END-2010 (1) 241,589 439,080 361,963 430,588 379,360 389,610 NIL NIL (1) The increase in capital through the subscription of preferential rights in October 2009 in accordance with the regulations in force and in order to take into account the detachment of a pre-emptive right led to the adjustment of the number and exercise prices of options not yet exercised.
Compulsory share ownership - Holding period for The Board has set a compulsory share holding of 30,000 shares for shares received on exercise of stock options Jean-Laurent Bonnafé, which is identical to the amount set for Georges From 1 January 2008, Michel Pébereau, Baudouin Prot and Georges Chodron de Courcel, the other Chief Operating Offi cer. Jean-Laurent Chodron de Courcel are required to own a minimum number of shares for Bonnafé must comply with this obligation, through the mandatory the duration of their term of offi ce, calculated based on both the opening ownership of shares or units in the Company Savings Plan fully invested BNP Paribas share price and their fi xed remuneration at 2 January 2007. in BNP Paribas shares, no later than by 1 September 2013, that is fi ve The number of shares held must be equal to 7 years’ fi xed salary for years after his appointment as a corporate offi cer. Michel Pébereau (58,700 shares) and Baudouin Prot (80,000 shares).
2010 Registration document and fi nancial report - BNP PARIBAS 247 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
The Chairman of the Board of Directors, Chief Executive Offi cer and Chief Loans, advances and guarantees granted to the Operating Offi cers are also required to hold a number of shares issued Group’s corporate officers following the exercise of stock options for the duration of their term of offi ce. This holding requirement represents 50% of the net gain realised At 31 December 2010, total outstanding loans granted directly or on the purchase of shares under options granted as from 1 January 2008 indirectly to the Group’s corporate offi cers amounted to EUR 3,286,908 for Michel Pébereau, Baudouin Prot and Georges Chodron de Courcel and (EUR 3,771,634 at 31 December 2009). It represents the total amount as from 1 September 2008 for Jean-Laurent Bonnafé. It will be considered of loans granted to BNP Paribas’ corporate offi cers and their spouses. as satisfi ed once the threshold defi ned for compulsory share ownership These loans representing normal transactions were carried out on an has been reached based on shares resulting from the exercise of options arm’s length basis. as of said dates.
Compensation and benefits awarded to 8.f RELATED PARTIES employee-elected Directors Other related parties of the BNP Paribas Group comprise consolidated Total compensation paid in 2010 to employee-elected Directors calculated companies (including entities consolidated under the equity method) based on their actual attendance amounted to EUR 99,785 (EUR 96,512 and entities managing post-employment benefi t plans offered to Group in 2009), excluding Directors’ fees. The total amount of Directors’ fees employees (except for multi-employer and multi-industry schemes). paid in 2010 to employee-elected Directors was EUR 91,945 (EUR 69,295 Transactions between the BNP Paribas Group and related parties are in 2009). These sums were paid directly to the trade union bodies of the carried out on an arm’s length basis. Directors concerned. Employee-elected Directors are entitled to the same death/disability Relations between consolidated companies 4 cover and the same Garantie Vie Professionnelle Accidents benefi ts as all BNP Paribas SA employees, as well as healthcare expense coverage. A list of companies consolidated by the BNP Paribas Group is provided The total amount of premiums paid into these schemes by BNP Paribas in note 8.b “Scope of consolidation”. As transactions and period-end in 2010 on behalf of the employee-elected Directors was EUR 1,619 (EUR balances between fully-consolidated entities are eliminated in full on 1,340 in 2009). consolidation, the tables below only show fi gures relating to transactions and balances with companies over which BNP Paribas exercises joint The employee-elected Directors belong to the defi ned-contribution plan control (accounted for by the proportionate consolidation method), set up for all BNP Paribas SA employees, in accordance with Article 83 of showing only the proportion not eliminated on consolidation, and the French General Tax Code. The total amount of contributions paid into companies over which BNP Paribas exercises significant influence this plan by BNP Paribas in 2010 on behalf of these corporate offi cers (accounted for by the equity method). was EUR 706 (EUR 660 in 2009). They are also entitled to top-up banking industry pensions under the industry-wide agreement that took effect on 1 January 1994.
248 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
➤ RELATED-PARTY BALANCE SHEET ITEMS
31 December 2010 31 December 2009 Consolidated Consolidated entities under Consolidated entities under Consolidated the proportionate entities under the the proportionate entities under the In millions of euros method equity method method equity method ASSETS Loans, advances and securities Demand accounts 91 456 193 2 Loans 4,111 1,240 3,975 2,128 Securities 195 77 209 1,416 Finance leases 5 - - Non-trading securities held in the portfolio 550 850 - - Other assets 3 67 23 66 TOTAL 4,955 2,690 4,400 3,612 LIABILITIES Deposits 4 Demand accounts 102 1,811 146 1,924 Other borrowings 69 44 35 330 Debt securities 65 177 132 57 Other liabilities 17 28 49 76 TOTAL 253 2,060 362 2,387 FINANCING COMMITMENTS AND GUARANTEE COMMITMENTS Financing commitments given 777 568 44 275 Guarantee commitments given 120 185 4 1,702 TOTAL 897 753 48 1,977
Within the scope of its International Retail Banking and Financial Services business, the Group also carries out trading transactions with related parties involving derivatives (swaps, options and forwards etc.) and fi nancial instruments (equities, bonds, etc.).
➤ RELATED-PARTY PROFIT AND LOSS ITEMS
Year to 31 Dec. 2010 Year to 31 Dec. 2009 Consolidated Consolidated entities under Consolidated entities under Consolidated the proportionate entities under the the proportionate entities under the In millions of euros method equity method method equity method Interest income 122 115 174 106 Interest expense (5) - (10) (23) Commission income 20 120 49 207 Commission expense (65) (46) (70) (67) Services provided 5 54 4 46 Services received - (344) - (277) Lease income 2 28 - 2 TOTAL 79 (73) 147 (6)
2010 Registration document and fi nancial report - BNP PARIBAS 249 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
Entities managing post-employment benefit Amounts received relating to services provided by Group companies in the plans offered to group employees year to 31 December 2010 totalled EUR 4.3 million, and mainly comprised management and custody fees (EUR 3.5 million at 31 December 2009). The main post-employment benefits of the BNP Paribas Group are retirement bonus plans, and top-up defined-benefit and defined- contribution pension plans. In Belgium, BNP Paribas Fortis funds a number of pension schemes 8.g BALANCE SHEET BY MATURITY managed by AG Insurance in which the BNP Paribas Group has an 18.73% The table below gives a breakdown of the balance sheet by contractual equity interest. maturity. The maturity of fi nancial assets and liabilities at fair value In other countries, post-employment benefi t plans are generally managed through profit or loss within the trading portfolio is deemed to be by independent fund managers or independent insurance companies, “undetermined” insofar as these instruments are intended to be sold and occasionally by Group companies (in particular BNP Paribas Asset or redeemed before their contractual maturity dates. The maturities of Management, BNP Paribas Assurance, Bank of the West and First variable-income fi nancial assets classifi ed as available for sale, derivative Hawaiian Bank). In Switzerland, a dedicated foundation manages pension hedging instruments, remeasurement adjustments on interest-rate risk plans for BNP Paribas Switzerland’s employees. hedged portfolios and undated subordinated debt are also deemed to be “undetermined”. Since the majority of technical reserves of insurance At 31 December 2010, the value of plan assets managed by Group companies are considered as demand deposits, they are not presented companies or by companies over which the Group exercises signifi cant in this table. infl uence was EUR 3,111 million (EUR 3,173 million at 31 December 2009).
4 Up to 1 At 31 December 2010 Not Overnight month (excl. 1 to 3 3 months More than In millions of euros determined or demand overnight) months to 1 year 1 to 5 years 5 years TOTAL Cash and amounts due from central banks and post offi ce banks 33,568 33,568 Financial assets at fair value through profi t or loss 832,945 832,945 Derivatives used for hedging purposes 5,440 5,440 Available-for-sale fi nancial assets 17,397 6,734 10,629 29,947 56,659 98,592 219,958 Loans and receivables due from credit institutions - 12,949 14,577 7,714 7,381 8,591 11,506 62,718 Loans and receivables due from customers 12 56,314 62,104 56,170 75,625 209,000 225,461 684,686 Remeasurement adjustment on interest-rate risk hedged portfolios2,317 2,317 Held-to-maturity fi nancial assets - 281 54 5,729 7,709 13,773 FINANCIAL ASSETS BY MATURITY 858,111 102,831 83,415 74,794 113,007 279,979 343,268 1,855,405 Due to central banks and post offi ce banks 2,123 2,123 Financial liabilities at fair value through profi t or loss 674,280 539 2,491 9,917 25,800 12,078 725,105 Derivatives used for hedging purposes 8,480 8,480 Due to credit institutions 28,248 86,138 20,586 11,357 13,238 8,418 167,985 Due to customers 337,186 139,416 38,018 21,202 26,575 18,517 580,913 Debt securities 39,224 54,288 50,891 48,228 16,037 208,669 Subordinated debt 3,316 - 41 471 8,610 12,312 24,750 Remeasurement adjustment on interest-rate risk hedged portfolios 301 301 FINANCIAL LIABILITIES BY MATURITY 686,377 367,557 265,317 115,424 93,838 122,451 67,362 1,718,326
250 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
Up to 1 At 31 December 2009 Not Overnight month (excl. 1 to 3 3 months More than In millions of euros determined or demand overnight) months to 1 year 1 to 5 years 5 years TOTAL Cash and amounts due from central banks and post offi ce banks 56,076 56,076 Financial assets at fair value through profi t or loss 828,784 828,784 Derivatives used for hedging purposes 4,952 4,952 Available-for-sale fi nancial assets 19,709 8,139 14,853 33,831 58,063 86,830 221,425 Loans and receivables due from credit institutions - 35,049 25,354 10,573 7,534 6,154 4,256 88,920 Loans and receivables due from customers 16 51,624 68,682 61,451 77,398 175,381 244,214 678,766 Remeasurement adjustment on interest-rate risk hedged portfolios2,407 2,407 Held-to-maturity fi nancial assets - 409 130 4,421 9,063 14,023 FINANCIAL ASSETS BY MATURITY 855,868 142,749 102,175 87,286 118,893 244,019 344,363 1,895,353 Due to central banks and post offi ce 4 banks 5,510 5,510 Financial liabilities at fair value through profi t or loss 655,330 615 3,935 8,348 27,264 13,845 709,337 Derivatives used for hedging purposes 8,108 8,108 Due to credit institutions 20,372 102,613 23,303 47,281 16,624 10,503 220,696 Due to customers 334,942 175,397 40,147 22,109 13,936 18,372 604,903 Debt securities 57,856 55,989 36,582 49,929 10,673 211,029 Subordinated debt 3,088 29 483 1,058 5,915 17,636 28,209 Remeasurement adjustment on interest-rate risk hedged portfolios 356 356 FINANCIAL LIABILITIES BY MATURITY 666,882 360,824 336,510 123,857 115,378 113,668 71,029 1,788,148
The majority of the fi nancing and guarantee commitments given, which amounted to EUR 314,731 million and EUR 102,563 million respectively at 31 December 2010 (EUR 273,764 million and EUR 104,650 million respectively at 31 December 2009), can be drawn at sight.
8.h FAIR VALUE OF FINANCIAL ■ Most of these fair values are not meaningful, and hence are not taken INSTRUMENTS CARRIED AT AMORTISED into account in the management of the commercial banking activities which use these instruments; COST ■ Estimating a fair value for fi nancial instruments carried at historical The information supplied in this note must be used and interpreted with cost often requires the use of modelling techniques, hypotheses and the greatest caution for the following reasons: assumptions that may vary from bank to bank. This means that ■ These fair values are an estimate of the value of the relevant comparisons between the fair values of fi nancial instruments carried at instruments as of 31 December 2010. They are liable to fl uctuate historical cost as disclosed by different banks may not be meaningful; from day to day as a result of changes in various parameters, such ■ The fair values shown below do not include the fair values of non- as interest rates and credit quality of the counterparty. In particular, fi nancial instruments such as property, plant and equipment, goodwill they may differ signifi cantly from the amounts actually received or and other intangible assets such as the value attributed to demand paid on maturity of the instrument. In most cases, the fair value is deposit portfolios or customer relationships. Consequently, these not intended to be realised immediately, and in practice might not be fair values should not be regarded as the actual contribution of the realised immediately. Consequently, this fair value does not refl ect instruments concerned to the overall valuation of the BNP Paribas the actual value of the instrument to BNP Paribas as a going concern; Group.
2010 Registration document and fi nancial report - BNP PARIBAS 251 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the fi nancial statements
31 December 2010 31 December 2009 Estimated Estimated In millions of euros Carrying value (1) fair value Carrying value (1) fair value FINANCIAL ASSETS Loans and receivables due from credit institutions 62,718 63,868 88,920 89,770 Loans and receivables due from customers 684,686 702,077 678,766 693,126 Held-to-maturity fi nancial assets 13,773 14,487 14,023 15,033 FINANCIAL LIABILITIES Due to credit institutions 167,985 168,360 220,696 222,000 Due to customers 580,913 581,894 604,903 606,661 Debt securities 208,669 208,921 211,029 210,987 Subordinated debt 24,750 23,649 28,209 27,752 (1) The carrying amount does not include the remeasurement of portfolios of fi nancial instruments in fair value hedging relationships. At 31 December 2010, this is included within “Remeasurement adjustment on interest-rate risk hedged portfolios” as EUR 2,317 million under assets, and EUR 301 million under liabilities (EUR 2,407 million and EUR 356 million, respectively, at 31 December 2009).
The fair value of a fi nancial instrument is defi ned as the amount for totalling EUR 52 million. All of these rulings have been appealed before 4 which an asset could be exchanged, or a liability settled, between the Cassation Court, and execution has been suspended pending the knowledgeable, willing parties in an arm’s length transaction. outcome of these appeals pursuant to Algerian law. BNP Paribas El Djazair will continue to vigorously defend itself before the Algerian courts with The valuation techniques and assumptions used by BNP Paribas ensure a view to obtaining recognition of its good faith towards the authorities, that the fair value of fi nancial assets and liabilities is measured on a which suffered no actual damage. consistent basis throughout the Group. Fair value is based on prices quoted in an active market when these are available. In other cases, fair On 27 June 2008, the Republic of Iraq lodged a lawsuit in New York value is determined using valuation techniques such as discounting of against 92 international companies having participated in the oil-for-food estimated future cash fl ows for loans, liabilities and held-to-maturity (“OFF”) programme, among them BNP Paribas. The complaint alleges, financial assets, or specific valuation models for other financial notably, that the defendants conspired to defraud the OFF programme, instruments as described in note 1, “Principal accounting policies applied thereby depriving the Iraqi people of more than USD 10 billion in food, by the BNP Paribas Group”. In the case of loans, liabilities and held-to- medicine and other humanitarian goods. The complaint also contends maturity fi nancial assets that have an initial maturity of less than one that BNP Paribas breached purported fi duciary duties and contractual year (including demand deposits) or are granted on fl oating-rate terms, obligations created by the banking agreement binding BNP Paribas and fair value equates to carrying amount. The same applies to most regulated the United Nations Organisation. The complaint is pleaded under the US savings products. Racketeer Infl uenced and Corrupt Organisations Act (“RICO”) which allows triple damages for successful plaintiffs if damages are awarded. The proceedings are currently in a jurisdictional phase. The court is expected to rule on its jurisdiction in 2011. 8.i CONTINGENT LIABILITIES: LEGAL PROCEEDING AND ARBITRATION There is no basis to sustain any accusation or allegation concerning any purported breach by the Bank in relation to any payments made by Legal action has been taken against several Algerian and international other persons in connection with the export of humanitarian goods to banks, including BNP Paribas El Djazair, a BNP Paribas SA subsidiary, Iraq under the OFF programme. The Bank intends to vigorously defend for administrative errors in processing international trade fi nancing itself against this complaint. applications. BNP Paribas El Djazair has been accused of non-compliance There is no other government, legal or arbitration proceeding, of which with foreign exchange regulations in seven cases before Algerian courts. the Company is aware, that is likely to have or has had within the last BNP Paribas El Djazair was ordered by a lower court to pay fi nes of 12 months a signifi cant impact on the fi nancial position or profi tability approximately EUR 200 million. Three of these cases were subsequently of the Company and/or Group. overturned on appeal, including the case involving the most signifi cant amount (EUR 150 million). Two other appeals rulings have upheld fi nes
252 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS Notes to the fi nancial statements 4
8.j FEES PAID TO THE STATUTORY AUDITORS Deloitte PricewaterhouseCoopers Mazars TOTAL In 2010 Excluding tax, in thousand of euros Total % Total % Total % Total % Audit Statutory audits and contractual audits, including: Issuer 4,162 17% 4,438 22% 1,187 11% 9,787 18% Consolidated subsidiaries 10,641 45% 10,157 51% 8,654 84% 29,452 55% Other reviews and services directly related to the statutory audit engagement, including: Issuer 253 1% 451 2% 202 2% 906 2% Consolidated subsidiaries 2,229 10% 3,836 19% 190 2% 6,255 11%
SUB-TOTAL 17,285 73% 18,882 94% 10,233 99% 46,400 86% Other services provided by the networks to fully-or proportionally-consolidated subsidiaries Tax and legal 106 0% 191 1% - 0% 297 0% Others 6,363 27% 924 5% 99 1% 7,386 14%
SUB-TOTAL 6,469 27% 1,115 6% 99 1% 7,683 14% TOTAL 23,754 100% 19,997 100% 10,332 100% 54,083 100% 4
Deloitte PricewaterhouseCoopers Mazars TOTAL In 2009 Excluding tax, in thousand of euros Total % Total % Total % Total % Audit Statutory audits and contractual audits, including: Issuer 3,261 19% 5,686 27% 1,134 12% 10,081 21% Consolidated subsidiaries 8,996 52% 12,660 59% 7,803 85% 29,459 61% Other reviews and services directly related to the statutory audit engagement, including: Issuer 15 0% 63 0% 41 0% 119 0% Consolidated subsidiaries 224 1% 1,296 6% 166 2% 1,686 4%
SUB-TOTAL 12,496 72% 19,705 92% 9,144 99% 41,345 86% Other services provided by the networks to fully-or proportionally-consolidated subsidiaries Tax and legal 1,330 8% 504 2% 17 0.2% 1,851 4% Others 3,567 20% 1,158 6% 62 1% 4,787 10%
SUB-TOTAL 4,897 28% 1,662 8% 79 1% 6,638 14% TOTAL 17,393 100% 21,367 100% 9,223 100% 47,983 100%
The audit fees paid to auditors which are not member of the network of in the table above, amount to EUR 2,325 thousand for the year 2010 one of the auditors certifying the consolidated fi nancial statements and (EUR 4,825 thousand in 2009). the non-consolidated fi nancial statements of BNP Paribas SA, mentioned
2010 Registration document and fi nancial report - BNP PARIBAS 253 CONSOLIDATED FINANCIAL STATEMENTS 4 BNP Paribas Statutory Auditors’ report on the consolidated fi nancial statements
4.7 BNP Paribas Statutory Auditors’ report on the consolidated fi nancial statements
Deloitte & Associés PricewaterhouseCoopers Audit Mazars 185, avenue Charles de Gaulle 63, rue de Villiers 61, rue Henri Regnault 92524 Neuilly-sur-Seine Cedex 92208 Neuilly-sur-Seine Cedex 92400 Courbevoie
This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of English speaking readers. The Statutory Auditors’ report includes information specifi cally required by French law in such reports, whether modifi ed or not. This information is presented below the opinion on the consolidated fi nancial statements and includes an explanatory paragraph discussing the Auditors’ assessments of certain signifi cant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the consolidated fi nancial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the consolidated fi nancial statements. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. 4 BNP Paribas 16, boulevard des Italiens 75009 Paris
To the Shareholders,
In compliance with the assignment entrusted to us by your General Shareholders’ Meeting, we hereby report to you, for the year ended 31 December 2010, on:
■ the audit of the accompanying consolidated fi nancial statements of BNP Paribas; ■ the justifi cation of our assessments; and ■ the specifi c verifi cation required by law. These consolidated fi nancial statements have been approved by the Board of Directors. Our role is to express an opinion on these consolidated nancialfi statements based on our audit.
I - Opinion on the consolidated fi nancial statements We conducted our audit in accordance with the professional standards applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated fi nancial statements are free of material misstatement. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the consolidated fi nancial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as the overall presentation of the consolidated fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated fi nancial statements give a true and fair view of the assets and liabilities and of the fi nancial position of the Group at 31 December 2010 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.
254 2010 Registration document and fi nancial report - BNP PARIBAS CONSOLIDATED FINANCIAL STATEMENTS BNP Paribas Statutory Auditors’ report on the consolidated fi nancial statements 4
II - Justifi cation of our assessments In accordance with the provisions of article L.823-9 of the French Commercial Code (Code de commerce) relating to the justifi cation of our assessments, we bring to your attention the following matters: Impairment provisions for credit and counterparty risk BNP Paribas records impairment provisions to cover the credit and counterparty risk inherent to its business as described in notes 1.c.5, 2.f, 4.a, 4.b, 4.d, 5.f and 5.g to the consolidated fi nancial statements. We examined the control procedures applicable to monitoring credit and counterparty risk, impairment testing methods and determining individual and portfolio-based impairment losses. Measurement of fi nancial instruments BNP Paribas uses internal models and methodologies to value its positions on fi nancial instruments which are not traded on active markets, as well as to determine certain provisions and assess whether hedging designations are appropriate. We examined the control procedures applicable to identifying inactive markets, verifying these models and determining the inputs used. Impairment of available-for-sale assets BNP Paribas recognises impairment losses on available-for-sale assets where there is objective evidence of a prolonged or signifi cant decline in value, as described in notes 1.c.5, 2.d and 5.c to the consolidated fi nancial statements. We examined the control procedures relating to the identifi cation of such evidence, the valuations of the most signifi cant captions, and the estimates used, where applicable, to record impairment losses. Impairment related to goodwill BNP Paribas carried out impairment tests on goodwill which led to the recording of impairment losses in 2010, as described in notes 1.b.4 and 5.n to the consolidated fi nancial statements. We examined the methods used to implement these tests as well as the main assumptions, inputs and estimates used, where applicable, to record impairment losses. 4 Business combinations In 2009, BNP Paribas acquired Fortis Banque SA and BGL SA, and fi nalised the purchase price allocation during the year using the purchase method in accordance with IFRS 3, as described in notes 1.b.4, and 8.d to the consolidated fi nancial statements. In this context, we examined the methods used to identify and measure the assets, liabilities and contingent liabilities at the acquisition date, as well as the methods used to determine fi nal negative goodwill. Deferred tax assets BNP Paribas recognised deferred tax assets during the year, notably in respect of tax loss carryforwards, as described in notes 1.k, 2.g and 5.j to the consolidated fi nancial statements. We examined the main estimates and assumptions used to record those deferred tax assets. Provisions for employee benefi ts BNP Paribas raises provisions to cover its employee benefi t obligations, as described in notes 1.h and 7.b to the consolidated nancialfi statements. We examined the method adopted to measure these obligations, as well as the main assumptions and inputs used. These assessments were made as part of our audit of the consolidated fi nancial statements taken as a whole, and therefore contributed to the opinion we formed which is expressed in the fi rst part of this report.
III - Specifi c verifi cation As required by law and in accordance with professional standards applicable in France, we have also verifi ed the information presented in the Group’s management report. We have no matters to report as to its fair presentation and its consistency with the consolidated fi nancial statements.
Neuilly-sur-Seine and Courbevoie, 7 March 2011
The Statutory Auditors
Deloitte & Associés PricewaterhouseCoopers Audit Mazars Pascal Colin Patrice Morot Guillaume Potel
2010 Registration document and fi nancial report - BNP PARIBAS 255 256 2010 Registration document and fi nancial report - BNP PARIBAS 5 PILLAR 3
5.1 Scope of application 258 Prudential scope 258 Signifi cant subsidiaries 262 Individual monitoring by the French supervisor 262
5.2 Risk management 262
5.3 Capital management and capital adequacy 263 Regulatory capital 263 Capital adequacy 263
5.4 Credit and counterparty risk 269 Credit risk 269 Credit risk management policy 269 Credit risk diversifi cation 269 Credit risk: internal ratings based approach (IRBA) 269 Credit risk: standardised approach 276 Exposure in default, Provisions and cost of risk 277 Counterparty risk 279 Securitisation transactions 281 Credit risk mitigation techniques 285
5.5 Market risk 286 Market risk related to trading in fi nancial instruments 286 Market risk related to banking activities 289
5.6 Operational risk 289 Risk reduction and hedging policy 289 Approach and scope 289 BNP Paribas Group operational risk exposure 290 Capital requirement by calculation approach 291 Risk reduction through insurance policies 291
5.7 Appendix: capital requirements of signifi cant subsidiaries 291 BNP Paribas Fortis 292 BNL 293 BancWest 294 Personal Finance 295 BNP Paribas Suisse SA 296
2010 Registration document and fi nancial report - BNP PARIBAS 257 PILLAR 3 5 Scope of application
The purpose of Pillar 3 - market discipline, is to complement the management and capital adequacy”. References to the corresponding minimum capital requirements (Pillar 1) and the supervisory review sections are provided throughout this chapter. process (Pillar 2) with a set of disclosures completing the usual fi nancial This chapter meets the obligations set forth in Title IX of the French Decree disclosures. It is designed to allow market participants to evaluate key of 20 February 2007 (1) on capital requirements for credit institutions and items of information such as scope of application, capital, exposure to investment fi rms, and applies to the consolidated BNP Paribas Group different types of risk, risk assessment procedures, and, consequently, (see Article 1). capital adequacy with respect to the institution’s risk profi le. A significant part of the information about BNP Paribas required under Pillar 3 is reported in note 4 to the Financial Statements, “Risk
5.1 Scope of application
The prudential scope of application defined in the French Decree accounting scope of consolidation. The following sections discuss the of 20 February 2007 on capital requirements is not the same as the differences between the two scopes, in accordance with the regulation.
PRUDENTIAL SCOPE 5
In accordance with French banking regulation (2), BNP Paribas Group has ■ asset disposals and risk transfers are assessed with regard to the defi ned a prudential scope to monitor capital adequacy ratios calculated nature of the risk transfer that results; thus, securitisation vehicles are on consolidated data. excluded from the prudential scope if the securitisation transaction is The prudential scope is generally the same as the scope of consolidation deemed effective under Basel II criteria, that is, providing a signifi cant outlined in note 8.b to the Financial Statements, with the following risk transfer; exceptions: ■ lastly, BNP Paribas Dérivés Garantis is excluded from the prudential scope as it is monitored individually by the French banking supervisor ■ insurance companies are not included in the prudential scope, (Autorité de Contrôle Prudentiel). in accordance with Article 1 of French Regulation 90-20 of 23 February 1990; insurance companies are subject to a deduction The consolidation principles and the scope of consolidation are described from Tier 1 capital according to Article 6-II of French regulation CRBF respectively in notes 1.b and 8.b to the Financial Statements. 90-02 modifi ed by the Decree of 20 February 2007;
(1) Issued by the French Ministry of the Economy, Finance and Industry. (2) CRBF Regulation 2000-03 of 6 September 2000.
258 2010 Registration document and fi nancial report - BNP PARIBAS PILLAR 3 Scope of application 5
The Group holds a share greater than 10% in the following credit and fi nancial institutions: Accea Finance Agricultural Finance Corporation Limited AMP Partners SA Associatie Cassa BV Athymis Gestion S.A. Atlanticomnium SA Baiduri Bank Berhad BAII Recouvrement Banca Impresa Lazio Spa Banco Cofi dis SA Banco de Servicios Financieros SA Banexi (U.K.) Limited (In members voluntary liquidation) Banking Funding Company S.A. Banque Franco Yougoslave Banque Internationale pour le Commerce et l’Industrie (BICI) Banque pour l’Industrie et le Commerce Comores Bewaarbedrijf Ameuro N.V. BGN Leasing BIAO Recouvrement BICI Bourse BMCI Bourse 5 BNP Capital Markets Limited (In members voluntary liquidation) BNP Equities Mauritius BNP Nominees Limited BNP PAM Malaysia SDN BHD BNP Paribas (Canada) Valeurs Mobilières Inc. BNP Paribas (Montevideo) S.A. – Ofi cina de Representacion de BNP Paribas BNP Paribas Andes BNP Paribas Asset Management (Part II) (Luxembourg) S.A. BNP Paribas Asset Management GmbH BNP Paribas Asset Management Monaco BNP Paribas Bank & Trust Cayman BNP Paribas Fund Services (Guernesey) Limited BNP Paribas Fund Services UK Limited BNP Paribas Futures Singapore Pte Ltd BNP Paribas Investment Company KSA BNP Paribas Investment Management CI Limited BNP Paribas Investment Partners (Suisse) SA BNP Paribas Investment Partners Argentina S.A. Sociedad Gerente de Fondos Comunes de Inversion BNP Paribas Investment Partners Canada Ltd. BNP Paribas Lease Group IFN SA BNP Paribas Leasing Egypt BNP Paribas Panama S.A BNP Paribas Securities (Japan) Preparatory Company Limited BNP Paribas Securities Services AM Limited BNP Paribas Securities Services Trust Company (Jersey) Limited
2010 Registration document and fi nancial report - BNP PARIBAS 259 PILLAR 3 5 Scope of application
BNP Paribas Trust Company (IOM) Limited BNP Paribas Trust Corporation UK Limited BNP Paribas Trust Services Singapore Limited BNP Paribas Uruguay SA BNP Representative Offi ce (Nigeria) Ltd BPI Caceis Fastnet Captive Finance Limited CD-PME (Soc Lux de Capital Développement pour PME) Cetelem (UK) Limited Cetelem Expansion Société en Nom Collectif Cetelem Renting Comptoir Agricole de Wallonie Credifarma Spa Credissimo Credissimo Hainaut S.A. Crédit Logement Crédit Social de la Province du Brabant Wallon CTN Promotora De Negocios Ltda Ecommerce Holding GmbH 5 Elimmo Emirates Lebanon Bank Euromezzanine Conseil Europay Luxembourg SC F P Consult Guernesey Limited Fimaser Findomestic Network Spa Finest S.A. Fortis Lease Danmark A/S Fortis Lease Holdings UK Limited Fortis Private Equity France S.A.S. France Titrisation GIM Vastgoed Management BV Het Werkmanshuis N.V. Insinger de Beaufort (SA) Pty Ltd Insinger de Beaufort UK Holding BV Integro Finance BV Integro Property BV Integro Securities BV Investment Fund Services Limited Istituto per il Credito Sportivo La Propriété Sociale de Binche-Morlanwelz S.A. Landbouwkantoor Van Vlaanderen NV Le Crédit Social de Tubize SA Le Crédit Social et Les Petits Propriétaires Réunis
260 2010 Registration document and fi nancial report - BNP PARIBAS PILLAR 3 Scope of application 5
Le Petit Propriétaire SA Leval 3 Liquiditats- Und Konsortialbank GmbH Marie Lease Sarl Massilia Bail 2 Nachenius Tjeenk & Co Global Custody NV Neuilly Contentieux Oney Magyarorszag ZRT Orange – Bnp Paribas Services Par Trois Parcadia Asset Management SA Paribas Petroleum Participations BV Personal Finance Solutions SA Premier Bank ZRT Primera Fund – Fortinbras Global Bond Trend Institutional Privilege (D) Primonial Fundquest Rothesay Select Manager Ltd Sicovam Holding Sint-Jozefskredietmaatschappij NV SNC Gestimur 5 Societa Regionale per La Promozione Dello Sviluppo Economico Dell’umbria Spa Société Belge d’investissement International SBI – Belgische Maatschappij Voor Internationale Investeringen BMI Société Financière de Beyrouth BNP Paribas Sofracem Soservi Société en Nom Collectif Tous Propriétaires SA Tradegate Ag Wertpapierhandelsbank Tuileries Financement 2 Tuileries Financement 3 UEB Investment Management Inc. Union Méditerranéenne de Finance Visalux Watamar & Partners SA WMI Limited
Due to the classifi cation of these entities as credit and fi nancial institutions, those shares were deducted from the prudential equity as of 31 December 2010.
2010 Registration document and fi nancial report - BNP PARIBAS 261 PILLAR 3 5 Risk management
SIGNIFICANT SUBSIDIARIES
The capital requirements of BNP Paribas’ signifi cant subgroups and The risk-weighted assets reported for BNP Paribas Fortis, BNL, BancWest subsidiaries are given in Appendix 5.7, in accordance with the regulation. and Personal Finance correspond to the sub-consolidation scope of each The capital requirements listed in the Appendix correspond to each group. entity’s contribution to the Group’s capital requirement after intragroup Information related to the concerned perimeters are described in note 8.b risk transfers, where applicable. to the Financial Statements under the following headings: Belux Retail The following subgroups are considered signifi cant, based on the criterion Banking, Retail Banking in Italy (BNL banca commerciale), Retail Banking that their risk-weighted assets amount to more than 3% of the Group’s in the United States and BNP Paribas Personal Finance. total risk-weighted assets at 31 December 2010: The differences mentioned at the beginning of section 5.1 between ■ BNP Paribas Fortis; consolidation and prudential perimeters apply to the significant ■ Banca Nazionale del Lavoro (BNL); subsidiaries. ■ BancWest; ■ Personal Finance.
INDIVIDUAL MONITORING BY THE FRENCH SUPERVISOR
Two entities, BNP Personal Finance and BNP Paribas Dérivés Garantis, Prudentiel), according to the supervisor’s guidelines and pursuant to 5 are monitored individually by the French supervisor (Autorité de Contrôle discussions between the supervisor and BNP Paribas.
5.2 Risk management
The strategies and processes for managing risks in each risk category (4.a - Risk management organisation, 4.d - Credit and counterparty risk, are described in note 4 to the Financial Statements, in its different parts 4.e - Market risk and 4.f - Operational risk).
262 2010 Registration document and fi nancial report - BNP PARIBAS PILLAR 3 Capital management and capital adequacy 5
5.3 Capital management and capital adequacy
REGULATORY CAPITAL
Details about the composition of the Group’s capital are given in note 4.c to the Financial Statements - Risk management and capital adequacy.
CAPITAL ADEQUACY
The Group’s capital requirement is calculated in accordance with the for investment fi rms and credit institutions (Decree of 20 February 2007 transposition into French law of the EU Directive on capital adequacy amended by the Decree of 25 August 2010).
5
2010 Registration document and fi nancial report - BNP PARIBAS 263 PILLAR 3 5 Capital management and capital adequacy
➤ PILLAR 1 RISK-WEIGHTED ASSETS AND CAPITAL REQUIREMENTS AT 31 DECEMBER 2010 At 31 December 2010, the total amount of Basel II Pillar 1 risk-weighted assets was EUR 600 billion, versus EUR 621 billion at 31 December 2009, broken down as follows by type of risk, calculation approach, and asset class: 31 December 2010 31 December 2009 Risk-weighted Capital Risk-weighted Capital In millions of euros assets Requirement assets Requirement CREDIT AND COUNTERPARTY RISK 503,872 40,310 510,379 40,830 Credit risk 481,103 38,488 482,944 38,636 Credit risk - IRBA 230,703 18,456 233,300 18,664 Central governments and central banks 4,628 370 3,250 260 Corporates 144,459 11,557 151,589 12,127 Institutions 18,253 1,460 18,280 1,462 Retail 40,244 3,220 37,167 2,974 Mortgages 10,777 862 9,257 741 Revolving exposures 7,114 569 7,451 596 Other exposures 22,353 1,788 20,459 1,637 Securitisation positions 22,915 1,833 22,753 1,820 Other non credit-obligation assets 204 16 261 21 Credit risk - Standardised approach 250,400 20,032 249,644 19,972 Central governments and central banks 5,181 415 6,599 528 Corporates 111,453 8,916 108,247 8,660 Institutions 7,237 579 7,535 603 Retail 81,826 6,546 79,132 6,330 Mortgages 27,121 2,170 25,638 2,051 Revolving exposures 4,118 329 2,803 224 5 Other exposures 50,588 4,047 50,691 4,055 Securitisation positions 2,288 183 7,483 599 Other non credit-obligation assets 42,415 3,393 40,648 3,252 Counterparty risk 22,769 1,822 27,435 2,194 Counterparty risk - IRBA 20,092 1,608 23,377 1,870 Central governments and central banks 153 13 253 20 Corporates 14,463 1,157 16,844 1,348 Institutions 5,476 438 6,280 502 Counterparty risk - Standardised approach 2,677 214 4,058 324 Central governments and central banks 6 0 0 0 Corporates 2,477 198 3,745 299 Institutions 185 15 302 24 Retail 9 1 11 1 Other exposures 9 1 11 1 EQUITY RISK 22,475 1,798 29,447 2,356 Internal model 18,995 1,519 23,102 1,848 Private equity exposures in diversifi ed portfolios 4,802 384 6,575 526 Listed equities 8,677 694 11,112 889 Other equity exposures 5,516 441 5,415 433 Simple weighting method 1,406 113 3,446 276 Private equity exposures in diversifi ed portfolios 1,085 87 1,099 88 Listed equities 15 1 807 65 Other equity exposures 307 25 1,540 123 Standardised approach 2,074 166 2,899 232 MARKET RISK 17,187 1,375 23,665 1,893 Internal model 9,532 763 13,577 1,086 Standardised approach 7,655 612 10,088 807 OPERATIONAL RISK 56,890 4,551 57,223 4,578 Advanced Measurement Approach (AMA) 35,619 2,849 36,563 2,925 Standardised approach 13,624 1,090 13,015 1,041 Basic indicator approach 7,647 612 7,645 612 TOTAL 600,424 48,034 620,714 49,657
264 2010 Registration document and fi nancial report - BNP PARIBAS PILLAR 3 Capital management and capital adequacy 5
➤ RISK-WEIGHTED ASSETS BY TYPE OF RISK AT authorised by Belgian banking and insurance supervisor (CBFA) to use the 31 DECEMBER 2010 (*) most advanced approach to assess its regulatory capital requirement. The internal rating policies and systems of the BNP Paribas Fortis and BGL BNP Paribas subgroups on the one hand and BNP Paribas on the other are set to converge to a single methodology used uniformly across the 4% (5%) entire Group. The review being conducted for this purpose has shown the Equity risk compatibility of the concepts developed in each of the two perimeters 84% (82%) and allowed a harmonisation of the ratings of the key counterparties, Credit and but has not been completed yet. Therefore a hybrid approach has been 3% (4%) counterparty risk (**) Market risk adopted at 31 December 2010, based respectively on methods that have been approved by the French and Belgian supervisors for each of the concerned perimeters. 9% (9%) Credit and counterparty risk accounts for 84% of the Group’s Basel II Operational risk risk-weighted assets, of which 80% for credit risk alone. Total: EUR 600 billion at 31 December 2010 For credit risk alone (excluding other non-credit obligation assets), EUR 621 billion at 31 December 2009 the share of risk-weighted assets under the IRB approach was 53% at 31 December 2010, unchanged compared with 31 December 2009. (*)The percentages between brackets correspond to the breakdown as of 31 December 2009. This signifi cant scope includes in particular Corporate and Investment Banking (CIB), French Retail Banking (FRB), a part of the Personal Finance (**) Including other non credit-obligation assets. business (Cetelem), BNP Paribas Securities Services (BP2S), and, since 30 June 2009, the entities of the subgroup BNP Paribas Fortis and BGL Credit and counterparty risk BNP Paribas for which efforts to achieve convergence with the methods, BNP Paribas has opted for the most advanced approaches allowed under processes and software tools of the BNP Paribas Group are ongoing. Basel II. In accordance with the EU Directive and its transposition into However, some entities, such as BNL and BancWest, are temporarily French law, in 2007 the French banking supervisor (Autorité de Contrôle excluded from the scope of consolidation. Other smaller entities, such Prudentiel) allowed the Group to use internal models to calculate capital as the subsidiaries in emerging countries, will use the Group’s advanced requirements starting on 1 January 2008. The use of these methods is methods only at a later stage. The standardised approach accounts for subject to conditions regarding progress and deployment. The Group 47% of the Basel II risk-weighted assets but only 28% of the risk exposure, 5 committed itself to comply with those conditions under the supervision because the standardised approach applies less favourable weights to of the French supervisor. Prior to its acquisition, the Fortis Group had been the corresponding assets.
2010 Registration document and fi nancial report - BNP PARIBAS 265 PILLAR 3 5 Capital management and capital adequacy
➤ CREDIT RISK-WEIGHTED ASSETS AND EXPOSURE BY APPROACH (1)
Credit risk- Risk-weighted assets on 31 December 2010 Credit risk- Risk-weighted assets on 31 December 2009
53% 53% IRBA IRBA
47% 47% Standardised approach Standardised approach
Total: EUR 438 billion Total: EUR 442 billion
Exposure to credit risk on 31 December 2010 Exposure to credit risk on 31 December 2009
5 72% 71% IRBA IRBA
28% 29% Standardised approach Standardised approach
Total: EUR 1,354 billion Total: EUR 1,330 billion
(1) Excluding other non-credit obligation assets.
266 2010 Registration document and fi nancial report - BNP PARIBAS PILLAR 3 Capital management and capital adequacy 5
Looking at counterparty risk, the share of risk-weighted assets using the IRBA accounted for 88% as of 31 December 2010, compared with 85% at 31 December 2009. However, Exposure at Default (EAD), weighted using the IRB approach accounted for mostly all of the total exposure: 96% at 31 December 2010 compared with 95% at 31 December 2009.
➤ COUNTERPARTY RISK-WEIGHTED ASSETS AND EXPOSURE BY APPROACH
Counterparty risk – Risk-weighted assets on 31 December 2010 Counterparty risk – Risk-weighted assets on 31 December 2009
88% 85% IRBA IRBA
12% 15% Standardised approach Standardised approach
Total: EUR 23 billion Total: EUR 27 billion
Counterparty risk – Exposure at Default (EAD) on 31 December 2010 Counterparty risk – Exposure at Default (EAD) on 31 December 2009
96% 95% 5 IRBA IRBA
4% 5% Standardised approach Standardised approach
Total: EUR 92 billion Total: EUR 100 billion
2010 Registration document and fi nancial report - BNP PARIBAS 267 PILLAR 3 5 Capital management and capital adequacy
Equity risk Operational risk The share of equity risk in the Group’s risk-weighted assets in 2010 The share of operational risk in the Group’s total risk-weighted assets declined from 5% at 31 December 2009 to 4% at 31 December 2010. was 9% at 31 December 2010, as it was at 31 December 2009. Details about each type of risk are given in sections 5.4. to 5.6. Market risk Market risk accounted for 3% of the Group’s Basel II risk-weighted assets at 31 December 2010, down from 4% at 31 December 2009.
➤ SOLVENCY RATIO
In millions of euros 31 Decembre 2010 31 Decembre 2009 TIER 1 CAPITAL 68,536 62,910 Tier 2 capital 20,109 25,298 Tier 2 regulatory deductions (1,303) (1,146) Allocated Tier 3 capital 982 1,352 REGULATORY CAPITAL 88,324 88,414 Credit risk 481,103 482,944 Counterparty risk 22,769 27,435 Equity risk 22,475 29,446 Market risk 17,187 23,666 Operational risk 56,890 57,223 5 Basel II Risk-weighted assets (ex fl oor) 600,424 620,714 Effect of Basel I fl oor on Tier 1 risk-weighted assets 847 CRD risk-weighted assets for Tier 1 ratio (*) 601,271 Effect of Basel I fl oor on otalt risk-weighted assets 6,872 CRD RISK-WEIGHTED ASSETS FOR TOTAL CAPITAL RATIO (**) 607,296 TIER 1 RATIO 11.4% 10.1% TOTAL CAPITAL RATIO 14.5% 14.2% (*) 80% of Basel I risk-weighted assets. (**) 80% of Basel I risk-weighted assets including the positive difference between provisions and expected losses.
Until 31 December 2011, the transitional regulatory Decree sets the fl oor risk-weighted assets and is therefore used in calculating the solvency for Basel II risk-weighted assets at 80% of the Basel I risk weighted assets. ratio, i.e., EUR 601.3 billion for the Tier 1 ratio. As of 31 December 2010, this fl oor was above the level of the Basel II
268 2010 Registration document and fi nancial report - BNP PARIBAS PILLAR 3 Credit and counterparty risk 5
5.4 Credit and counterparty risk
(See note 4.d to the Financial Statements - Credit and counterparty risk.)
CREDIT RISK
This section does not include counterparty risk, securitisation positions and other non credit-obligation assets.
CREDIT RISK MANAGEMENT POLICY
(See note 4.d to the Financial Statements - Credit and counterparty risk: Management of credit risk on lending activities)
CREDIT RISK DIVERSIFICATION 5 INDUSTRY DIVERSIFICATION GEOGRAPHIC DIVERSIFICATION (See note 4.d to the Financial Statement - Credit and counterparty risk: (See note 4.d to the Financial Statements - Credit and counterparty risk: Industry diversifi cation) Geographic diversifi cation)
CREDIT RISK: INTERNAL RATINGS BASED APPROACH (IRBA)
INTERNAL RATING SYSTEM CREDIT RISK EXPOSURE BY CLASS AND (See note 4.d to the Financial Statements - Credit and counterparty risk: INTERNAL RATING Internal rating system) Corporate portfolio The tables below present the breakdown by internal rating of loans and commitments for all the Group’s business lines using the advanced IRB The following table provides the breakdown by internal rating of the approach. The tables also give the weighted averages of the main risk corporate loans and commitments (asset classes: corporates, central parameters in the Basel framework: governments and central banks, and institutions) for all the Group’s ■ weighted average of Credit Conversion Factor (CCF) for off-balance business lines using the advanced IRBA. This exposure represented EUR sheet items: average CCF (1) ; 721 billion of the gross credit risk at 31 December 2010, compared with EUR 710 billion at 31 December 2009, and concerns CIB, FRB, BeLux ■ average Loss Given Default weighted by Exposure At Default: average Retail Banking as well as BNP Paribas Securities Services (BP2S) within LGD (2); the Investment Solutions division. as well as the average risk weight: average RW (3) defi ned as the ratio between risk-weighted assets and Exposure At Default (EAD). The last column presents the expected loss at a one-year horizon.
(1) Average CCF: average of Credit Conversion Factor weighted by off-balance sheet exposure (2) Average LGD: average Loss Given Default weighted by Exposure At Default (3) Average RW: average risk weight.
2010 Registration document and fi nancial report - BNP PARIBAS 269 PILLAR 3 5 Credit and counterparty risk
31 December 2010 Off- Average Balance balance off- Exposure Internal Total sheet sheet balance at Default Average Average Expected In millions of euros rating exposure exposure exposure sheet CCF (EAD) LGD RW loss Central governments and central banks 1 144,682 143,188 1,494 99% 144,232 6% 0% 0 2 13,682 13,142 540 65% 13,455 9% 4% 0 3 1,450 1,299 151 74% 1,421 9% 5% 0 4 5,923 5,735 188 60% 5,837 21% 27% 2 5 4,218 2,031 2,187 55% 3,256 14% 20% 1 6 1,580 1,080 500 55% 1,369 9% 24% 2 7 1,850 840 1,010 66% 1,510 4% 13% 2 8 574 401 173 70% 526 3% 19% 2 9 169 102 67 55% 131 22% 116% 4 10 203 188 15 50% 194 68% 358% 25 11 31 31 0 30 0%20 TOTAL 174,362 168,037 6,325 69% 171,961 7% 3% 58 Institutions 1 25,259 20,543 4,716 67% 23,884 14% 4% 1 2 29,934 24,051 5,883 70% 28,475 10% 5% 2 3 18,890 14,994 3,896 69% 17,673 26% 13% 4 4 7,037 5,035 2,002 61% 6,349 30% 26% 3 5 5 7,442 6,018 1,424 64% 6,914 33% 41% 8 6 3,337 2,204 1,133 57% 2,910 40% 78% 12 7 3,460 2,606 854 58% 3,087 25% 74% 22 8 1,804 1,214 590 57% 1,586 23% 87% 25 9 946 586 360 58% 805 26% 226% 45 10 863 168 695 78% 726 26% 155% 40 11 919 864 55 99% 933 5% 234 12 213 207 6 100% 216 2% 143 TOTAL 100,104 78,490 21,614 67% 93,558 19% 20% 539 Corporates 1 10,280 2,829 7,451 53% 6,787 23% 8% 1 2 62,360 17,414 44,946 57% 42,998 36% 11% 5 3 55,959 18,842 37,117 53% 38,402 37% 20% 12 4 69,439 28,766 40,673 58% 51,632 33% 27% 28 5 73,445 37,659 35,786 64% 58,489 31% 40% 67 6 76,646 45,447 31,199 69% 64,687 24% 50% 173 7 55,747 34,261 21,486 73% 48,459 23% 71% 331 8 19,894 13,808 6,086 76% 18,217 22% 83% 260 9 4,307 3,220 1,087 59% 3,858 23% 111% 104 10 6,037 4,146 1,891 66% 5,253 23% 125% 229 11 9,072 7,849 1,223 81% 8,695 14% 3,628 12 2,955 2,784 171 87% 2,949 1% 2,371 TOTAL 446,141 217,025 229,116 62% 350,426 29% 41% 7,209 TOTAL 720,607 463,552 257,055 62% 615,945 21% 27% 7,806
270 2010 Registration document and fi nancial report - BNP PARIBAS PILLAR 3 Credit and counterparty risk 5
31 December 2009 Off- Average Balance balance off- Exposure Internal Total sheet sheet balance at Default Average Average Expected In millions of euros rating exposure exposure exposure sheet CCF (EAD) LGD RW loss Central governments and central banks 1 161,739 159,338 2,401 91% 162,581 9% 0% 0 2 8,508 7,539 969 88% 8,354 4% 1% 0 3 2,961 2,794 167 76% 2,904 19% 16% 0 4 1,490 1,356 134 96% 1,492 15% 14% 0 5 3,372 1,651 1,721 56% 2,608 17% 22% 2 6 1,400 998 402 60% 1,241 12% 31% 2 7 1,175 742 433 55% 981 9% 24% 2 8 571 395 176 54% 491 10% 35% 3 9 18 18 0 50% 18 6% 32% 0 10 355 159 196 79% 306 35% 190% 20 11 102 26 76 94% 97 0%25 TOTAL 181,691 175,016 6,675 76% 181,073 9% 2% 54 Institutions 1 26,106 20,089 6,017 68% 24,380 12% 4% 1 2 41,112 34,377 6,735 68% 38,733 22% 6% 3 3 13,647 9,759 3,888 71% 12,545 31% 16% 3 4 9,861 7,204 2,657 63% 8,870 38% 27% 6 5 7,548 6,030 1,518 68% 7,101 34% 40% 8 5 6 3,840 2,316 1,524 67% 3,382 34% 68% 11 7 2,257 1,523 734 68% 2,019 38% 115% 20 8 2,295 1,458 837 55% 1,948 18% 68% 23 9 626 298 328 59% 501 34% 155% 19 10 878 474 404 59% 718 26% 141% 32 11 1,236 957 279 84% 1,184 7% 250 12 295 288 7 96% 287 1% 58 TOTAL 109,701 84,773 24,928 67% 101,668 24% 18% 434 Corporates 1 10,268 3,160 7,108 58% 7,271 33% 8% 1 2 50,784 15,527 35,257 61% 36,841 35% 11% 5 3 51,140 16,827 34,313 57% 36,253 37% 21% 11 4 69,990 30,450 39,540 62% 54,038 35% 31% 33 5 67,796 38,195 29,601 67% 56,708 32% 44% 70 6 75,122 45,345 29,777 73% 64,349 26% 53% 168 7 53,606 35,069 18,537 76% 47,737 26% 75% 349 8 18,121 12,221 5,900 80% 16,790 23% 86% 251 9 3,934 2,777 1,157 63% 3,500 27% 126% 108 10 5,859 4,266 1,593 78% 5,481 23% 122% 249 11 9,831 8,334 1,497 81% 9,395 23% 4,191 12 2,549 2,333 216 85% 2,545 4% 2,587 TOTAL 419,000 214,504 204,496 66% 340,908 31% 44% 8,023 TOTAL 710,392 474,293 236,099 66% 623,649 24% 28% 8,511
2010 Registration document and fi nancial report - BNP PARIBAS 271 PILLAR 3 5 Credit and counterparty risk
Most of the Group’s central governments and central banks and Retail portfolio institutions counterparties are of very high credit quality and based in developed countries, meaning that they have excellent internal ratings The following table gives the breakdown by internal rating of the retail and very low average Loss Given Default. However, the public defi cits loans and commitments for all of the Group’s business lines using the increase following the crisis has led the Group to downgrade some advanced IRB approach. This exposure represented EUR 198 billion at sovereign counterparties, contributing to the outstandings variations 31 December 2010, compared with EUR 184 billion at 31 December 2009, by ratings between the end of 2009 and the end of 2010, in particular and primarily concerns French Retail Banking (FRB), BeLux Retail Banking the decrease of the outstandings rated 1 and 3 and the increase of the and consumer loan subsidiaries of Personal Finance in Western Europe. outstandings rated 2 and 4. The majority of the Group’s corporate commitments concerns counterparties of excellent or good quality, refl ecting the large part of multinationals in BNP Paribas’ customer base. Others exposures are mainly structured transactions or transactions secured by high-quality assets, refl ected in their average LGD levels.
5
272 2010 Registration document and fi nancial report - BNP PARIBAS PILLAR 3 Credit and counterparty risk 5
31 December 2010 Off- Average Balance balance off- Exposure Internal Total sheet sheet balance at Default Average Average Expected In millions of euros rating exposure exposure exposure sheet CCF (EAD) LGD RW loss Mortgages 2 23,388 22,314 1,074 100% 23,406 14% 1% 1 3 10,679 10,077 602 100% 10,725 14% 3% 2 4 11,460 10,955 505 100% 11,489 14% 5% 3 5 24,094 23,165 929 100% 24,087 13% 9% 13 6 13,298 12,980 318 100% 13,174 11% 20% 16 7 7,548 6,984 564 100% 7,510 11% 31% 24 8 640 603 37 100% 650 9% 50% 10 9 1,324 1,301 23 100% 1,327 16% 84% 26 10 708 696 12 100% 707 14% 79% 29 11 146 146 0 100% 146 200% 16 12 924 921 3 100% 920 0% 118 TOTAL 94,209 90,142 4,067 100% 94,141 13% 11% 258 Revolving exposures 2 900 203 697 52% 1,778 50% 1% 0 3 1,698 365 1,333 22% 1,764 49% 2% 0 4 4,632 277 4,355 45% 2,746 56% 5% 3 5 5,129 369 4,760 41% 2,800 50% 9% 5 6 5,114 677 4,437 33% 2,508 48% 20% 13 5 7 5,055 2,193 2,862 49% 3,757 42% 38% 47 8 1,716 1,172 544 49% 1,501 44% 65% 41 9 1,070 845 225 49% 1,032 47% 100% 56 10 1,438 1,187 251 44% 1,338 48% 138% 200 11 1,446 1,017 429 4% 1,038 86% 546 12 458 458 0 101% 458 0% 274 TOTAL 28,656 8,763 19,893 40% 20,720 48% 34% 1,185 Other exposures 1 2 2 0 2 32% 18% 0 2 3,774 2,955 819 100% 3,660 34% 4% 0 3 3,906 3,127 779 93% 3,862 35% 8% 1 4 6,193 5,184 1,009 88% 6,169 35% 13% 3 5 15,252 12,738 2,514 94% 14,843 28% 22% 19 6 14,075 12,743 1,332 87% 13,633 22% 28% 35 7 13,898 12,679 1,219 90% 13,693 21% 35% 83 8 7,115 6,626 489 85% 7,082 19% 38% 93 9 3,440 3,308 132 86% 3,500 30% 58% 123 10 3,031 2,972 59 90% 3,033 27% 67% 289 11 2,847 2,804 43 83% 2,827 88% 1,356 12 1,906 1,894 12 100% 1,966 0% 1,071 TOTAL 75,439 67,032 8,407 91% 74,270 26% 30% 3,074 TOTAL 198,304 165,937 32,367 61% 189,131 22% 21% 4,516
2010 Registration document and fi nancial report - BNP PARIBAS 273 PILLAR 3 5 Credit and counterparty risk
31 December 2009 Off- Average Balance balance off- Exposure Internal Total sheet sheet balance at Default Average Average Expected In millions of euros rating exposure exposure exposure sheet CCF (EAD) LGD RW loss Mortgages 2 20,751 19,957 794 100% 20,750 15% 1% 1 3 9,589 9,274 315 100% 9,588 15% 3% 1 4 11,055 10,656 399 100% 11,045 14% 5% 3 5 22,036 21,308 728 100% 22,009 13% 9% 12 6 11,165 10,805 360 100% 11,136 11% 20% 20 7 6,230 5,874 356 100% 6,216 12% 31% 22 8 441 430 11 100% 440 12% 48% 4 9 1,169 1,150 19 100% 1,169 17% 87% 23 10 592 584 8 100% 591 15% 84% 22 11 457 457 0 100% 457 44% 102 12 454 451 3 100% 450 0% 40 TOTAL 83,939 80,946 2,993 100% 83,851 14% 11% 250 Revolving exposures 2 1,333 346 987 48% 1,962 47% 1% 0 3 2,179 477 1,702 58% 2,549 57% 3% 1 4 3,164 302 2,862 44% 2,011 52% 5% 2 5 5,887 449 5,438 50% 3,598 46% 8% 6 5 6 5,390 958 4,432 54% 3,685 45% 20% 18 7 4,171 1,945 2,226 60% 3,421 43% 39% 44 8 1,997 1,304 693 65% 1,808 46% 68% 52 9 1,045 840 205 62% 1,035 46% 97% 54 10 1,588 1,299 289 46% 1,466 48% 138% 204 11 1,786 1,409 377 6% 1,434 45% 810 TOTAL 28,540 9,329 19,211 52% 22,969 47% 32% 1,191 Other exposures 1 17 17 0 100% 17 19% 2% 0 2 3,623 3,030 593 98% 3,472 35% 4% 0 3 4,463 3,658 805 92% 4,242 35% 8% 1 4 7,541 6,234 1,307 88% 7,289 34% 12% 4 5 12,546 10,592 1,954 89% 12,319 33% 23% 18 6 12,220 10,596 1,624 84% 11,907 28% 31% 36 7 12,371 11,159 1,212 82% 12,066 23% 34% 74 8 7,518 6,977 541 78% 7,410 22% 38% 98 9 3,409 3,259 150 81% 3,451 30% 57% 120 10 3,256 3,196 60 91% 3,245 24% 57% 269 11 4,627 4,472 155 93% 4,596 40% 2,657 12 312 297 15 80% 303 0% 782 TOTAL 71,903 63,487 8,416 87% 70,317 29% 29% 4,059 TOTAL 184,382 153,762 30,620 66% 177,137 24% 21% 5,500
274 2010 Registration document and fi nancial report - BNP PARIBAS PILLAR 3 Credit and counterparty risk 5
Most of the mortgage exposures concern the French Retail Banking For the scope under the IRB approach, the Group believes that publishing business (FRB), BNP Paribas Fortis and BGL BNP Paribas. Mortgages are a comparison between Expected Losses (EL) at one year and realised cost issued according to strict and well-defi ned procedures. The low average of risk (as requested by Article 384–4 i. of the Regulation) is not relevant Loss Given Default level refl ects the guarantees put in place when the for the following reasons: mortgages were granted. ■ risk parameters used to calculate Expected Loss (EL) at a one-year Most of the revolving exposures and other exposures relate to consumer horizon according to Basel II principles, displayed in the previous loans subsidiaries that have a wide range of customers in terms of credit tables, are statistical estimates through the cycle. quality and a lower level of guarantees. ■ realised losses, on the other hand, refer to the past period, therefore at a particular point in time.
5
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CREDIT RISK: STANDARDISED APPROACH
(See note 4.d. to the Financial Statements, Credit and counterparty risk: standardised approach. This exposure represented EUR 378 billion of the Quality of the portfolio exposed to credit risk) gross credit risk at 31 December 2010, compared with EUR 377 billion at 31 December 2009. The following table gives the breakdown by counterparty credit rating of the loans and commitments for all the Group business lines using the
31 December 2010 31 December 2009 Risk- Risk- Gross Exposure weighted Gross Exposure weighted exposure at Default exposure exposure at Default exposure In millions of euros External rating (*) (**) (EAD) (RWA) (**) (EAD) (RWA) Central governments and central banks AAA to AA- 11,516 11,486 91 18,882 18,814 195 A+ to A- 1,947 1,903 135 1,808 1,737 108 BBB+ to BBB- 1,829 1,801 908 7,324 7,291 3,006 BB+ to BB- 2,299 2,296 2,227 2,140 2,137 2,137 B+ to B- 990 990 993 350 345 343 No external rating 1,037 1,036 826 855 803 810 TOTAL 19,618 19,512 5,180 31,359 31,127 6,599 Institutions AAA to AA- 22,219 20,557 4,166 20,418 19,064 3,737 A+ to A- 574 475 236 698 619 254 5 BBB+ to BBB- 1,124 829 723 662 542 423 BB+ to BB- 651 517 517 145 63 62 B+ to B- 245 209 209 40 36 35 CCC+ to D000757 No external rating 2,404 2,184 1,386 6,691 5,969 3,017 TOTAL 27,217 24,771 7,237 28,661 26,298 7,535 Corporates AAA to AA- 1,516 1,463 546 887 862 167 A+ to A- 1,072 948 477 1,113 1,078 539 BBB+ to BBB- 549 435 436 671 582 582 BB+ to BB- 425 359 360 444 389 388 B+ to B- 437 398 602 219 167 250 CCC+ to D 9 7 10 78 77 115 No external rating 150,675 114,149 109,022 145,929 113,419 106,205 TOTAL 154,683 117,759 111,453 149,341 116,575 108,246 Retail No external rating 176,009 145,748 81,826 167,960 138,593 79,132 TOTAL 176,009 145,748 81,826 167,960 138,593 79,132 TOTAL 377,527 307,790 205,696 377,321 312,593 201,512 (*) According to Standard & Poor’s. (**) Balance sheet and off-balance sheet.
The table above excludes counterparty risk, other non-credit-obligation assets and securitisation positions.
276 2010 Registration document and fi nancial report - BNP PARIBAS PILLAR 3 Credit and counterparty risk 5
At 31 December 2010, 84% of the Group’s total exposure to central Group entities that use the standardised approach to calculate their governments, central banks, and institutions was investment grade, capital requirement typically have a business model focused primarily compared with 83% at 31 December 2009. on individuals or SMEs or are located in a region of the world with an underdeveloped credit rating system (Turkey, Ukraine, Middle East, etc.). As a result, most of corporate counterparties do not have an external rating under the standardised approach.
EXPOSURE IN DEFAULT, PROVISIONS AND COST OF RISK
(See note 4.d to the Financial Statements-Credit and counterparty risk, in particular impairment procedures and loans with past-due instalments, whether impaired or not, and related collateral or other security – Table 9).
➤ EXPOSURE IN DEFAULT BY GEOGRAPHIC BREAKDOWN
31 December 2010 Exposure in default (*) Standardised Fair value In millions of euros Gross exposure approach IRBA adjustment France 343,764 3,555 8,225 5,523 Belgium & Luxembourg 180,919 156 4,615 2,093 Italy 155,504 10,397 128 5,369 United Kingdom 57,292 179 1,362 1,335 Netherlands 48,400 41 614 175 5 Germany 37,070 213 567 398 Other West European countries 112,788 1,643 2,485 2,354 Central Eastern Europe 38,970 2,376 863 1,967 Turkey 20,898 348 9 237 Mediterranean 19,121 543 195 474 Gulf States & Africa 33,670 434 1,178 659 North America 165,363 1,265 2,189 954 Latin America 31,383 499 700 776 Japan & Australia 43,523 38 751 343 Emerging Asian countries 64,889 147 231 178 TOTAL 1,353,554 21,834 24,112 22,835 (*) Gross exposure (balance sheet and off-balance sheet) before collateral or other security
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31 December 2009 Exposure in default (*) Standardised Fair value In millions of euros Gross exposure approach IRBA adjustment France 341,622 3,144 7,906 5,534 Belgium & Luxembourg 171,809 215 4,070 2,742 Italy 162,469 7,719 615 4,369 United Kingdom 55,961 183 1,361 1,078 Netherlands 37,592 55 283 323 Germany 35,765 198 755 512 Other West European countries 107,976 1,638 2,183 1,544 Central Eastern Europe 45,881 2,119 1,074 1,277 Turkey 16,946 431 12 225 Mediterranean 27,195 634 200 642 Gulf States & Africa 31,363 437 901 466 North America 175,537 1,537 2,687 1,291 Latin America 27,214 351 719 770 Japan & Australia 41,977 51 811 415 Emerging Asian countries 50,669 102 360 196 TOTAL 1,329,976 18,814 23,937 21,384 5 (*) Gross exposure (balance sheet and off-balance sheet) before collateral or other security
➤ EXPOSURES IN DEFAULT, FAIR VALUE ADJUSTMENTS, AND COST OF RISK BY BASEL II ASSET CLASS
The cost of risk in the table below relates to credit risk only and does not include impairments of counterparty risk on market fi nancial instruments. (See note 2.f to the Financial Statements, Cost of risk.) 31 December 2010 Exposure in default (*) Gross Standardised Fair value Total portfolio In millions of euros exposure approach IRBA adjustment provisions Cost of risk Central governments and central banks 193,980 26 32 65 Corporates 600,824 9,947 12,027 11,382 Institutions 127,321 548 1,132 638 Retail 374,313 10,756 7,726 9,535 Securitisation positions 57,116 557 3,195 1,215 TOTAL 1,353,554 21,834 24,112 22,835 5,495 (4,635) (*) Gross exposure (balance sheet and off-balance sheet) before collateral or other security.
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31 December 2009 Exposure in default (*) Gross Standardised Fair value Total portfolio In millions of euros exposure approach IRBA adjustment provisions Cost of risk Central governments and central banks 213,050 92 102 90 Corporates 568,341 7,782 12,380 9,734 Institutions 138,362 432 1,531 596 Retail 352,342 9,501 7,636 9,492 Securitisation positions 57,881 1,007 2,288 1,472 TOTAL 1,329,976 18,814 23,937 21,384 5,661 (8,239) (*) Gross exposure (balance sheet and off-balance sheet) before collateral or other security.
➤ PERFORMING EXPOSURES WITH PAST DUE INSTALMENTS BY BASEL II ASSET CLASS AND CALCULATION APPROACH
31 December 2010 Maturities of unimpaired past-due loans (*) Between Between 90 days 180 days and More than In millions of euros Up to 90 days and 180 days 1 year 1 year Total Central governments and central banks 80 3 1 0 84 Corporates 4,475 263 23 55 4,816 Institutions 155 0 3 23 181 Retail 4,092 181 11 34 4,318 5 TOTAL STANDARDISED APPROACH 8,802 447 38 112 9,399 Central governments and central banks 24 16 40 Corporates 2,539 27 31 101 2,698 Institutions 173 3 1 177 Retail 3,203 45 16 15 3,279 TOTAL IRB APPROACH 5,939 75 47 133 6,194 TOTAL 14,741 522 85 245 15,593 (*) Based on FINREP, gross exposure (balance sheet) before collateral or other security.
COUNTERPARTY RISK
(See note 4.d to the Financial Statements - Credit and counterparty risk) The exposure on securities financing transactions and deferred settlement transactions concern the Fixed Income business (primarily The Group’s counterparty risk exposures on derivatives cover all bonds), the Equity and Advisory business, primarily equity (stock lending derivatives in BNP Paribas portfolios, whatever the underlying assets or and borrowing) and BNP Paribas Securities Services (BP2S), both bonds divisions. Most of these exposures concern the Fixed Income business and equity. line.
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➤ EXPOSURES AT DEFAULT (EAD) BY CALCULATION APPROACH
31 December 2010 Internal model (EEPE) (*) NPV (**) + Add-On TOTAL In millions of euros IRBA Standardised Sub-total IRBA Standardised Sub-total Derivatives 59,491 67 59,558 13,094 3,401 16,495 76,053 Securities fi nancing transactions and deferred settlement transactions 13,715 3 13,718 2,544 2,544 16,262 TOTAL 73,206 70 73,276 15,638 3,401 19,040 92,315
31 December 2009 Internal model (EEPE) (*) NPV (**) + Add-On In millions of euros IRBA Standardised Sub-total IRBA Standardised Sub-total TOTAL Derivatives 62,028 89 62,117 16,715 4,822 21,537 83,654 Securities fi nancing transactions and deferred settlement transactions 12,898 0 12,898 3,397 12 3,409 16,307 TOTAL 74,926 89 75,015 20,112 4,834 24,946 99,961 (*) Effective Expected Positive Exposure. (**) Net Present Value.
Most of the Exposures at Default (EAD) on counterparty risk are The collateral guarantees applied as a reduction of EAD under the 5 measured using internal models as described in note 4.d. to the Financial standardised method amounted to EUR 199 million at 31 December 2010. Statements, and collateral on derivatives is taken into account directly in The Risk-weighted assets for counterparty risk are then calculated by the calculation of Effective Expected Positive Exposure (EEPE). multiplying EAD by a risk weight that depends on the approach used For the Group’s exposure that is not calculated using internal models (standardised or IRB Approach). (about 3% of total exposures of historical scope of BNP Paribas, including When EAD is modelled and weighted using the IRB Approach, LGD is Fortis scope since 2009), Exposure at Default is calculated using the not adjusted for collateral guarantees because the collateral amount market value method (Net Present Value + Add-On). is directly taken into account in the calculation of Effective Expected For the credit derivatives exposures, the internal model incorporates a Positive Exposure. correlation between market data and probabilities of default. Exposure Exposure to counterparty risk declined between 31 December 2009 and is therefore conditional on default, and accounts for wrong-way risk. On 31 December 2010 due to derivatives positions, primarily on NPV + Add- a case-by-case basis, Exposure at Default on material transactions is On exposures within BNP Paribas Fortis. re-estimated using special models that take into account the adverse correlation risk. Furthermore, specific additional stress tests are performed as part of the monitoring of transactions exhibiting wrong- way risk.
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SECURITISATION TRANSACTIONS
BNP PARIBAS SECURITISATION ACTIVITY ACCOUNTING METHODS (See note 4.d to the Financial Statements - Credit and counterparty (See note 1.d to the Financial Statements - Summary of signifi cant risk: securitisation) accounting policies applied by the Group)
SECURITISED EXPOSURES (See note 4.d to the Financial Statements - Credit and counterparty risk: securitisation)
➤ SECURITISED EXPOSURES ORIGINATED BY BNP PARIBAS BY SECURITISATION TYPE
Securitised exposures originated In millions of euros by BNP Paribas Calculation Securitisation type approach 31 December 2010 31 December 2009 IRBA 13,312 14,066 Traditional Standardised 2,890 4,701 TOTAL 16,202 18,767
➤ SECURITISED EXPOSURES ORIGINATED BY BNP PARIBAS BY UNDERLYING ASSET CATEGORY
Securitised exposures originated In millions of euros by BNP Paribas Asset category (*) 31 December 2010 31 December 2009 5 Residential mortgages 14,277 16,584 Loans to corporates or SMEs 787 909 Re-securitisation 928 956 Other assets 210 318 TOTAL 16,202 18,767 (*) This breakdown is based on the predominant underlying asset in the securitisation.
At 31 December 2010, fi ve securitisation transactions, all on residential At 31 December 2010, EUR 0.8 billion of loans to corporates had been mortgages, were effi cient from a Basel II perspective: Vela Home 3, securitised within transactions arranged by the Group. originated by BNL; UCI 14, UCI 15, UCI 16 and UCI 17, originated by the The EUR 0.9 billion of re-securitisation exposures are due to Spanish subsidiary UCI, for a total exposure of EUR 2.7 billion. BNP Paribas Fortis integration. Furthermore, the securitisation exposures At the same date, no consumer loan securitisation transaction was of the special purpose vehicle Royal Park Investment (RPI), EUR effi cient from a Basel II perspective. 11.5 billion, are essentially made up of residential mortgages.
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SECURITISATION POSITIONS ■ If the securitisation position does not have an external rating, and if BNP Paribas is the originator or sponsor, the Group uses the Securitisation positions held or acquired, Supervisory Formula Approach. In this approach the risk weight is by calculation approach calculated from a formula provided by the banking supervisor that factors in the internal credit rating of the underlying asset portfolio, Under the standardised approach, risk-weighted assets are calculated as well as the structure of the transaction (most notably the amount by multiplying Exposure at Default by a risk weight based on an external of credit enhancement subscribed out by the Group); rating of the securitisation position, as required by Article 222 of the ■ The internal ratings approach is applied for liquidity facilities in the French Decree of 20 February 2007. In a small number of cases, a look- ABCP programmes of the BNP Paribas Fortis and BGL BNP Paribas through approach may be applied. Securitisation positions rated B+ or portfolios for which there are no external ratings. This approach has lower or without an external rating are given a risk weighting of 1,250%. been approved by the CBFA; The standardised approach is used for securitisation positions originated ■ by BNL or UCI and for securitisation investments made by BancWest and A look-through approach may be applied to derive the risk weight in the Investment Solutions division. a very small number of cases. At 31 December 2010, the IRB Approach is used for positions held by the Under the IRB Approach, risk-weighted assets are calculated according CIB division and BNP Paribas Fortis. to one of the following methods: For rated securitisation positions, the Group uses external ratings from ■ If the securitisation position has an external rating, the Group uses the Standard & Poor’s, Moody’s, and Fitch rating agencies. These ratings an external rating-based method whereby the position’s risk weight are mapped to equivalent credit quality levels in accordance with the is determined directly from a correspondence table provided by the instructions of the French banking supervisor. banking supervisor that matches risk weights to external ratings;
In millions of euros 31 December 2010 31 December 2009 Securitisation positions held or Securitisation positions held or Calculation approach acquired (EAD) Risk-weighted assets acquired (EAD) Risk-weighted assets IRBA 48,147 22,916 46,817 22,753 5 Standardised 3,784 2,288 5,260 7,483 TOTAL 51,931 25,204 52,077 30,236
Risk-weighted assets corresponding to securitisation positions held or The change refl ects primarily the amortisation of securitisation portfolio acquired by the Group amounted to EUR 25 billion at 31 December 2010 and transfers realised in 2010. (4% of BNP Paribas total risk-weighted assets), compared with EUR 30.2 billion (4.9%) at 31 December 2009.
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➤ SECURITISATION POSITIONS HELD OR ACQUIRED, BY UNDERLYING ASSET CATEGORY
In millions of euros Securitisation positions held or acquired (EAD) BNP Paribas role Asset category (*) 31 December 2010 Originator Residential mortgages 4,201 Loans to corporates or SMEs 130 Re-securitisation positions 16 Other assets 4 TOTAL ORIGINATOR 4,351 Sponsor Residential mortgages 819 Consumer loans 2,087 Credit card receivables 810 Loans to corporates or SMEs 4,395 Commercial and industrial loans 3,714 Commercial real-estate properties 884 Finance leases 2,713 Re-securitisation positions 880 Other assets 1,138 TOTAL SPONSOR 17,440 Investor Residential mortgages 14,639 Consumer loans 4,054 Credit card receivables 180 5 Loans to corporates or SMEs 6,120 Commercial and industrial loans 31 Commercial real-estate properties 3,829 Finance leases 226 Re-securitisation positions 423 Other assets 638 TOTAL INVESTOR 30,140 TOTAL 51,931 (*) Based on the predominant asset class in the asset pool of the securitisation in which the position is held.
➤ SECURITISATION POSITION QUALITY
At 31 December 2010, 89% of the securitisation positions held or acquired by the Group were senior tranches, compared with 87% at 31 December 2009, refl ecting the high quality of the Group’s portfolio. The corresponding Exposures at Default (EADs) and risk weights are given in the following tables:
In millions of euros Securitisation positions held or acquired (EAD) Tranche quality 31 December 2010 31 December 2009 Senior tranche 46,091 45,343 Mezzanine tranche 5,162 6,193 First-loss tranche 678 541 TOTAL 51,931 52,077
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➤ SECURITISATION POSITIONS BY APPROACH, CALCULATION METHOD, AND RISK WEIGHT
➤ IRB approach
In millions of euros Securitisation positions held or acquired (EAD) Calculation method 31 December 2010 31 December 2009 6% - 10% 24,151 20,842 12% - 18% 1,860 1,890 20% - 35% 3,514 2,753 50% - 75% 1,131 870 100% 456 386 250% 290 145 425% 350 155 650% 115 84 External ratings based method 31,867 27,125 1,250% 1,600 2,065 Internal Assessment Approach 1,856 2,005 [0%- 7%] 8,145 10,179 ]7% - 100%] 3,986 4,871 ]100% - 350%] 164 43 ]350% - 1,250%] 529 529 Supervisory Formula Approach 12,824 15,622 5 TOTAL 48,147 46,817
Out of the EUR 32 billion of securitisation positions with an external ■ the great majority (93% by EAD, versus 94% at 31 December 2009) are ratings: rated above BBB+ at 31 December 2010.
■ 76% by EAD are rated above A+ and therefore have a risk weight of less than 10% at 31 December 2010, compared with 77% at 31 December 2009;
➤ Standardised approach
In millions of euros Securitisation positions held or acquired (EAD) Risk weight 31 December 2010 31 December 2009 20% 2,808 3,508 50% 355 537 100% 294 246 350% 162 347 External ratings based method 3,619 4,638 1,250% 162 614 Look-through approach 38 TOTAL 3,784 5,260
Of the EUR 3.6 billion of securitisation positions with an external rating, at 31 December 2009) are rated above AA- and therefore bear a risk a large majority (78% by EAD at 31 December 2010, compared with 76% weight of 20%.
284 2010 Registration document and fi nancial report - BNP PARIBAS PILLAR 3 Credit and counterparty risk 5
Customer securitisation programmes The BNP Paribas Group carries out securitisation programmes involving the creation of special-purpose entities on behalf of its customers. These (See section 3.3, Business activity and accounting items in 2010, Selected programmes have liquidity facilities and, where appropriate, guarantee exposures based on Financial Stability Board recommendations) facilities. Special-purpose entities over which the Group does not exercise control are not consolidated.
CREDIT RISK MITIGATION TECHNIQUES
Credit risk mitigants (CRM) are taken into account according to the ■ the pledge must be documented; Basel II rules. In particular, their effect is assessed under conditions ■ the Bank must be able to assess the value of the collateral security characteristic of an economic downturn. The CRM fall into two main under economic downturn conditions; categories: ■ the Bank must have reasonable comfort in the potential appropriation Guarantees on the one hand, and collateral on the other hand. and realisation of the asset concerned. ■ A guarantee (surety) is the commitment by a third party to replace the In the CIB division, each collateral is evaluated using appropriate primary obligor in the event of default. By extension, credit insurance techniques, and the mitigating effect is evaluated individually for each and credit derivatives (purchased protection) fall into this category. case. In the Retail Banking business, the presence or absence of a ■ Collateral pledged to the Bank are used to secure timely performance particular type of collateral may, depending on the coverage ratio, lead of a borrower’s fi nancial obligations. to assigning the exposure to particular LGD class on a statistical basis. For the scope under the IRB approach, guarantees and collaterals are Guarantees are granted by the obligor’s parent company or by other taken into account, provided they are eligible, by decreasing the Loss entities such as fi nancial institutions. Other examples of guarantees are Given Default (LGD) parameter that applies to the transactions of the credit derivatives, guarantees from public or private insurers. banking book. A guarantee cannot be eligible to improve the risk parameters of a For the scope under the standardised approach, guarantees are taken transaction unless the guarantor is rated better than the counterparty, 5 into account, provided they are eligible, by applying the more favourable and the guarantor is subject to same requirements as the primary debtor risk weight of the guarantor to a portion of the secured exposure adjusted in terms of prior credit analysis. for currency and maturity mismatches. Collateral is taken into account In accordance with general rating policy, collateral and guarantees are as a decrease in the exposure, after adjustment for any currency and taken into account at their economic value and are only accepted as the maturity mismatches. principal source of repayment by exception. In the context of commodities Guarantors are subject to the same rigorous credit risk assessment fi nancing, for example, the repayment capacity of the obligor must be process as primary obligors. assessed on the basis of its operating cash fl ow. The assessment of credit risk mitigating effect follows a methodology The economic value of the collateralised assets must be assessed with that is approved centrally for each activity and is used throughout the great objectivity and the Bank has to document it. It may be a market Group. In the CIB division, risk mitigation effects take account of possible value, a value appraised by an expert, a book value. The economic value correlation between the guarantor and the borrower (for example, is the current value at the date of appraisal and not a worst case value. whether they belong to the same industry sector). Credit committees Lastly, Group procedures require a re-evaluation of collaterals at least must approve the mitigation effects attributed to each loan at inception annually. and at each subsequent annual review. Collateral is divided into two categories: fi nancial collateral and other collateral:
■ Financial collateral consists of cash amounts (including gold), equities (listed or unlisted) and bonds. ■ Other collateral can take the form of real estate mortgage, pledge on vessel or aircraft, pledge on stock, assignment of contracts or any other right with respect to an asset of the obligor. To be eligible, collaterals must fulfi l the following conditions:
■ the value of the collateral must not be highly correlated with the risk on the obligor (in particular, shares of the obligor are not eligible);
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➤ IRB APPROACH – CORPORATE PORTFOLIO
The following table gives for the Corporate portfolio the breakdown by Basel asset class of the risk mitigation resulting from collateral and guarantees relating to the portfolio of loans and credit commitments for all the Group’s business lines using the advanced IRB approach. 31 December 2010 Risk mitigation Guarantees and Total guarantees In millions of euros Total exposure credit derivatives Collateral and collaterals Central governments and central banks 174,362 5,106 31,523 36,630 Corporates 446,141 80,885 72,338 153,223 Institutions 100,104 4,903 10,228 15,131 TOTAL 720,607 90,894 114,089 204,983
Guarantees on securitisation positions amounted to EUR 5.1 billion at 31 December 2010. The Belgian government’s guarantee on the RPI senior tranches accounts for EUR 4.8 billion.
➤ STANDARDISED APPROACH – CORPORATE PORTFOLIO
The following table gives for the Corporate portfolio the breakdown by Basel asset class of the risk mitigation resulting from collateral and guarantees relating to the portfolio of loans and credit commitments for all the Group’s business lines using the standardised approach. 31 December 2010 Risk mitigation Guarantees and Total guarantees 5 In millions of euros Total exposure credit derivatives Collateral and collaterals Central governments and central banks 19,618 40 40 Corporates 154,683 761 7,921 8,682 Institutions 27,217 254 143 397 TOTAL 201,518 1,015 8,104 9,119
5.5 Market risk
MARKET RISK RELATED TO TRADING IN FINANCIAL INSTRUMENTS
CAPITAL REQUIREMENT FOR MARKET RISK for which the internal model cannot be used, and on the other hand BY CALCULATION APPROACH the market risk of certain entities of the Group that are not covered by internal models. Pending convergence, market risk is calculated using the two internal models that apply respectively to BNP Paribas excluding Fortis on the The standardised approach is used to calculate foreign exchange risk for one hand and BNP Paribas Fortis on the other hand. all banking and trading books, with the exception of BNP Paribas Fortis Belgium, whose foreign exchange risk is measured by BNP Paribas Fortis’ The market risk calculated using the standardised approach covers on the VaR. one hand the issuer risk of the BNP Paribas Fortis scope of consolidation
286 2010 Registration document and fi nancial report - BNP PARIBAS PILLAR 3 Market risk 5
31 December 2010 31 December 2009 Market risk Market risk excl. foreign Foreign Total market excl. foreign Foreign Total market In millions of euros exchange risk exchange risk risk exchange risk exchange risk risk Internal model 756 7 763 1,068 18 1,086 Standardised approach 79 533 612 310 497 807 TOTAL 835 540 1,375 1,378 515 1,893
MARKET RISKS RELATED TO THE TRADING RISK MONITORING POLICY BOOK (See note 4.e to the Financial Statements - Market Risk related to (See note 4.e to the Financial Statements - Market Risk related to fi nancial instruments) fi nancial instruments)
➤ CAPITAL REQUIREMENT BY RISK FACTOR
Type of risk 31 December 2010 31 December 2009 Internal model 763 1,086 Standardised approach 612 807 Commodity risk 15 32 Interest rate risk 62 278 Equity position risk 21 Foreign exchange risk 533 496 5 TOTAL 1,375 1,893
INTERNAL MODEL FOR MARKET RISK The fi fteen stress test scenarios outlined by GRM correspond to crisis situations; i.e., major shocks affecting all market risk factors (interest rate, (See note 4.e to the Financial Statements - Market risk related to fi nancial equity, credit, volatility, currency, etc.). These stress tests have revealed a instruments) limited level of potential losses, confi rming the Group’s strong resilience to market risks; none of these worst-case scenarios taken individually Market risk under normal market conditions would have a serious adverse impact on the Bank’s fi nancial strength. (See note 4.e to the Financial Statements - Market risk related to trading It is nevertheless useful to keep in mind that scenarii 2 and 8 both in fi nancial instruments) materialised during the fourth quarter of 2008. The fi fteen scenarios simulate a variety of different stresses as follows: Market risk under extreme market conditions ■ Scenario 1: Unexpected rate hike by central banks, driving short-term (See note 4.e to the Financial Statements - Market risk related to trading rates higher with a fl attening of the interest rate curve; in fi nancial instruments) ■ Scenario 2: Stock market crash, coupled with a fl ight to quality and Along with the stress tests that the Group performs to simulate the central bank intervention, leading to a drop and a steepening of the impact of extreme market conditions on the value of trading portfolios, interest rate curve; Group Risk Management has outlined stress test scenarios for each ■ Scenario 3: Major terrorist attack in Western countries; market activity in order to manage its risks, including the most complex ■ Scenario 4: Collapse of US dollar; ones. ■ Scenario 5: Emerging market crisis driven from Asia; The stress tests results are presented to business lines managers, and, ■ Scenario 6: Emerging markets crisis driven from Latin America; new stress test limits are established if needed. Since the beginning of ■ the subprime crisis, Group Risk Management has been performing daily Scenario 7: Middle East crisis with severe consequences on energy stress tests in order to obtain an almost real-time assessment of any markets; changes in the risk profi le. ■ Scenario 8: Hedge Fund systemic crisis, leading to sharp moves in all markets where hedge funds are active (CDO correlation, convertibles, etc.);
2010 Registration document and fi nancial report - BNP PARIBAS 287 PILLAR 3 5 Market risk
■ Scenario 9: Credit crunch, leading to a general risk aversion; ■ Scenario 13: Major earthquake in California with consequences on EUR/ ■ Scenario 10: Euro confi dence crisis; USD exchange rate and interest rate differentials; ■ ■ Scenario 11:Sharp increase in infl ation expectations, driving rates Scenario 14: Eruption of fl u pandemic leading to a general risk aversion higher with a steepening of the interest rate curve; and sharp fall in equity and credit markets; ■ ■ Scenario 12: Change in Japanese monetary policy, with surge and Scenario 15: Mild rally in equity and emerging markets, low realised fl attening of the JPY interest rate curve and a strongly negative impact volatility and drop in implied volatility in all markets. on the JPY currency;
➤ AVERAGE ANNUAL DECREASE IN 2009 AND 2010 REVENUES FROM MARKET ACTIVITIES AS A RESULT OF EACH OF THE 15 STRESS SCENARIOS (IN MILLIONS OF EUROS)
300 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 200
100
0
-100
-200
-300
-400
-500 5 -600 -700
2009 2010
The stress-test scenarios used by BNP Paribas Fortis and BGL BNP Paribas Trading book measurement method are slightly different from those used by BNP Paribas in its historical scope of consolidation. The work to achieve convergence of the market The trading book is measured at fair value through profi t or loss, as stress-testing methodologies is currently being fi nalised. required by IAS 39.
288 2010 Registration document and fi nancial report - BNP PARIBAS PILLAR 3 Operational risk 5
MARKET RISK RELATED TO BANKING ACTIVITIES
EQUITY RISK (See note 4.e to the Financial Statements - Market risk related to banking activities.) The following table gives a breakdown of the Group’s equity risk exposures by investment objective.
➤ BREAKDOWN OF RISK EXPOSURE BY INVESTMENT OBJECTIVE
Exposure (*) In millions of euros 31 December 2010 31 December 2009 Strategic objective 2,254 3,139 Return on investment objective 6,017 5,646 Equity investments related to business 7,312 6,728 TOTAL 15,883 15,513 (*) Fair value (balance sheet + off-balance sheet).
Exposures at 31 December 2010 amounted to EUR 15.9 billion, versus FOREIGN EXCHANGE RISK EUR 15.5 billion at 31 December 2009. Off-balance sheet items amounted (See note 4.e to the Financial Statements - Market risk related to banking to EUR 5.1 billion at 31 December 2010, versus EUR 4.2 billion at activities.) 31 December 2009 and are guarantees given to UCITS shareholders.
INTEREST-RATE RISK (See note 4.e to the Financial Statements - Market risk related to banking 5 activities.)
5.6 Operational risk
RISK REDUCTION AND HEDGING POLICY
(See note 4.f to the Financial Statements - Operational risk : Risk management framework.)
APPROACH AND SCOPE
The Group Compliance department has outlined the Group’s operational The corresponding capital requirement is calculated for each legal entity risk management approach, by delegation from the Risk Management in the BNP Paribas Group prudential scope. The amount of risk-weighted Department. This approach uses an operational risk model scaled to be assets is calculated by multiplying the capital requirement by 12.5. proportionate to the risk being incurred and aims to ensure that the vast BNP Paribas uses a hybrid approach combining the Advanced majority of operational risks are covered. Measurement Approach (AMA), standardised approach, and basic indicator approach.
2010 Registration document and fi nancial report - BNP PARIBAS 289 PILLAR 3 5 Operational risk
For the Group in its pre-Fortis confi guration, the AMA methodology ■ it uses historical data as well as forecasts to calculate capital has been deployed in the most signifi cant entities of each division or requirements, with a predominance for forecasts because forecast retail banking operational entities. This includes most of FRB, CIB, and can be shaped to refl ect severe risks; Investment Solutions. ■ the model is faithful to its input data, so that its results can be used Entities that are still in the process of deploying the AMA, such as BNL easily by each of the Group’s business lines. Most of the assumptions Spa, currently use the standardised approach. Some small, relatively are therefore included in the data themselves; non material entities in divisions primarily using the AMA also use the ■ it is prudent in its capital requirement calculations. The input data are standardised approach. thoroughly reviewed, and any supplemental data are added if needed The basic indicator approach is used in only a few situations, such to cover all relevant risks within the Group. as newly-acquired entities, proportionally consolidated entities The AMA uses VaR (Value at Risk), or the maximum potential loss over (partnerships), or entities in certain emerging countries. one year, at a 99.9% confi dence level to calculate regulatory capital Several entities that were formerly part of Fortis, including requirements. BNP Paribas Fortis and BGL BNP Paribas, are also AMA-approved Capital requirements are calculated on an aggregate level using data institutions with a similar framework to the one used at BNP Paribas. from all Group entities that have adopted the AMA, then allocated to The capital requirement for the other smaller entities is calculated using individual legal entities. the basic indicator approach. These approaches will gradually be melded (See note 4.f to the Financial Statements - Operational risk) into the BNP Paribas Group framework as entities are integrated, systems are migrated, and processes are approved by the banking supervisor. FIXED-PARAMETER APPROACHES ADVANCED MEASUREMENT APPROACH BNP Paribas uses fi xed-parameter approaches (basic or standardised) (AMA) to calculate the capital requirements for entities in the Group’s scope of consolidation that are not integrated in the internal model. Under the Advanced Measurement Approach (AMA) for calculating capital Basic indicator approach: The capital requirement is calculated by requirements as deployed within the historical scope of BNP Paribas multiplying the entity’s average net banking income (the exposure (before the acquisition of Fortis), the bank must develop an internal indicator) over the past three years by an alpha parameter set by the operational risk model based on internal loss data (historical and regulator (15% risk weight). 5 potential), external loss data, scenario analyses, environmental factors, and internal controls. Standardised approach: The capital requirement is calculated by multiplying the entity’s average net banking income over the past three BNP Paribas’ internal model meets the AMA criteria and includes the years by a beta factor set by the regulator according to the entity’s following features: business category. Therefore in order to use the banking supervisor’s beta ■ the model uses an aggregate annual loss distribution, meaning that the parameters, the Group has divided all its business lines into the eight frequency and severity of losses from operational risks are modelled Basel II business categories, with each business line assigned to these using an actuarial approach and according to distributions calibrated categories, without exception nor overlap. with available data;
BNP PARIBAS GROUP OPERATIONAL RISK EXPOSURE
Basel II divides operational loss events into seven categories: (i) internal etc.), (v) damage to physical assets, (vi) business disruption and system fraud, (ii) external fraud, (iii) employment practices and workplace failures, (vii) failures in process execution, delivery and management safety (such as an anomaly in the recruitment process), (iv) customers, (data entry error, error in documentation, etc.). products and business practices (such as product defects, mis-selling,
290 2010 Registration document and fi nancial report - BNP PARIBAS PILLAR 3 Appendix: capital requirements of signifi cant subsidiaries 5
➤ OPERATIONAL LOSSES: BREAKDOWN BY EVENT TYPE External fraud is the main operational loss event. Fraud of this kind, (AVERAGE 2006 -2010) (*) such as payment and credt fraud, is fairly common in the world of retail banking. In corporate and investment banking, incidents of fraud are 2% (2%) rarer but of larger scale. Employment practices and Just behind fraud comes process failures, typically arising from execution 38% (47%) workplace safety or transaction processing errors. External fraud 13% (10%) The third biggest loss event corresponds to events associated with Clients, products business practices, and the prevalence of these has been trending and business practices upwards over time. Internal fraud accounts for about 6% of the groups 1% (1%) operational losses, with marked differences in geographic concentration. Damage to The remaining types of incidents account for relatively small amounts physical assets 6% (4%) of losses. Internal fraud 3% (3%) 37% (33%) Business disruption The BNP Paribas Group pays the utmost attention to analysing its and system failures Execution, delivery operational risk incidents in order to improve its already well-structured and process management control system.
(*) Percentages in brackets correspond to average loss by type of event for the 2006- 2009 period.
CAPITAL REQUIREMENT BY CALCULATION APPROACH 5 (See section 5.3, Capital management and capital adequacy.)
RISK REDUCTION THROUGH INSURANCE POLICIES
(See note 4.f to the Financial Statements – Operationnal Risk : Insurance policies.)
5.7 Appendix: capital requirements of signifi cant subsidiaries
The following tables give the capital requirements of signifi cant subsidiaries (as contribution to the Group’s total capital requirement) by type of risk, except for market risk on the trading book.
2010 Registration document and fi nancial report - BNP PARIBAS 291 PILLAR 3 5 Appendix: capital requirements of signifi cant subsidiaries
BNP PARIBAS FORTIS
31 December 2010 31 December 2009 Risk-weighted Capital Risk-weighted Capital In millions of euros assets (*) Requirement (*) assets (*) Requirement (*) CREDIT AND COUNTERPARTY RISK 113,008 9,041 123,713 9,897 Credit risk 108,326 8,666 115,047 9,204 Credit risk - IRBA 64,074 5,126 86,442 6,916 Central governments and central banks 1,593 127 1,194 96 Corporates 32,798 2,624 52,127 4,170 Institutions 6,037 483 9,724 778 Retail 12,401 992 10,997 880 Mortgages 5,263 421 4,287 343 Revolving exposures 65 5 58 5 Other exposures 7,073 566 6,652 532 Securitisation positions 11,042 883 12,139 971 Other non credit-obligation assets 203 16 261 21 Credit risk - Standardised approach 44,252 3,540 28,605 2,288 Central governments and central banks 2,307 185 1,366 109 Corporates 20,474 1,638 15,538 1,243 Institutions 1,932 155 1,232 99 Retail 12,235 979 5,033 402 Mortgages 445 36 893 71 Revolving exposures 442 35 318 25 Other exposures 11,348 908 3,822 306 5 Securitisation positions 212 17 0 0 Other non credit-obligation assets 7,092 567 5,436 435 Counterparty risk 4,682 375 8,666 693 Counterparty risk - IRBA 3,673 294 6,236 499 Central governments and central banks 5 0 18 1 Corporates 1,481 119 3,022 242 Institutions 2,187 175 3,196 256 Counterparty risk - Standardised approach 1,009 81 2,430 194 Central governments and central banks 6 0 0 0 Corporates 982 79 2,291 183 Institutions 12 1 129 10 Retail 9 1 10 1 EQUITY RISK 4,437 355 6,234 499 Internal model 978 78 0 0 Listed equities 13 1 0 0 Other equity exposures 965 77 0 0 Simple weighting method (other exposures) 1,407 113 3,446 276 Private equity exposures in diversifi ed portfolios 1,085 87 1,099 88 Listed equities 15 1 807 65 Other equity exposures 307 25 1,540 123 Standardised approach 2,052 164 2,788 223 MARKET RISK 3,485 279 5,556 445 Internal model 1,304 104 1,449 116 Standardised approach 2,181 175 4,107 329 OPERATIONAL RISK 12,042 963 11,037 883 Advanced Measurement Approach (AMA) 8,256 660 7,963 637 Standardised approach 269 22 0 0 Basic indicator approach 3,517 281 3,074 246 TOTAL 132,972 10,638 146,540 11,723 (*) End of period.
The risk-weighted assets evolution between end of 2009 and end of 2010 are essentially due to the perimeter changes, linked to the re-focusing of BNP Paribas Fortis on its core business, in accordance with its integration plan into BNP Paribas Group.
292 2010 Registration document and fi nancial report - BNP PARIBAS PILLAR 3 Appendix: capital requirements of signifi cant subsidiaries 5
BNL
31 December 2010 31 December 2009 Risk-weighted Capital Risk-weighted Capital In millions of euros assets (*) Requirement (*) assets (*) Requirement (*) CREDIT AND COUNTERPARTY RISK 68,524 5,482 60,912 4,873 Credit risk 67,840 5,427 60,238 4,819 Credit risk - IRBA 145 12 151 12 Central governments and central banks 10 1 0 0 Corporates 111 9 151 12 Institutions 24 2 0 0 Credit risk - Standardised approach 67,695 5,416 60,086 4,807 Central governments and central banks 56 5 2 0 Corporates 45,761 3,661 40,588 3,247 Institutions 1,554 124 1,442 115 Retail 16,825 1,346 14,749 1,180 Mortgages 8,960 717 6,620 530 Other exposures 7,865 629 8,129 650 Securitisation positions 212 17 407 33 Other non credit-obligation assets 3,287 263 2,898 232 Counterparty risk 684 55 674 54 5 Counterparty risk - Standardised approach 684 55 674 54 Corporates 600 48 586 47 Institutions 84 7 88 7 EQUITY RISK 575 46 704 56 Internal model 575 46 704 56 Private equity exposures in diversifi ed portfolios 0 0 67 5 Listed equities 1 0 1 0 Other equity exposures 574 46 637 51 MARKET RISK 16 1 38 3 Standardised approach 16 1 38 3 OPERATIONAL RISK 4,682 375 4,491 360 Advanced Measurement Approach (AMA) 39 3 0 0 Standardised approach 4,561 365 4,223 338 Basic indicator approach 82 7 268 22 TOTAL 73,797 5,904 66,145 5,292 (*) End of period.
2010 Registration document and fi nancial report - BNP PARIBAS 293 PILLAR 3 5 Appendix: capital requirements of signifi cant subsidiaries
BANCWEST
31 December 2010 31 December 2009 Risk-weighted Capital Risk-weighted Capital In millions of euros assets (*) Requirement (*) assets (*) Requirement (*) CREDIT AND COUNTERPARTY RISK 39,968 3,197 40,543 3,243 Credit risk 39,650 3,172 40,265 3,221 Credit risk - Standardised approach 39,650 3,172 40,265 3,221 Corporates 22,787 1,823 20,699 1,656 Institutions 1,246 100 1,210 97 Retail 12,106 969 11,128 890 Mortgages 5,639 451 5,394 432 Revolving exposures 509 41 460 37 Other exposures 5,958 477 5,274 422 Securitisation positions 707 57 4,823 386 Other non credit-obligation assets 2,804 224 2,405 192 Counterparty risk 318 25 278 22 Counterparty risk - Standardised approach 318 25 278 22 Corporates 318 25 278 22 EQUITY RISK 5 0 12 1 5 Internal model 5 0 12 1 Listed equities 0 0 7 1 Other equity exposures 5 0 5 0 MARKET RISK 75 6 36 3 Standardised approach 75 6 36 3 OPERATIONAL RISK 3,002 240 2,813 225 Standardised approach 3,002 240 2,813 225 TOTAL 43,050 3,444 43,405 3,472 (*) End of period.
294 2010 Registration document and fi nancial report - BNP PARIBAS PILLAR 3 Appendix: capital requirements of signifi cant subsidiaries 5
PERSONAL FINANCE
31 December 2010 31 December 2009 Risk-weighted Capital Risk-weighted Capital In millions of euros assets (*) Requirement (*) assets (*) Requirement (*) CREDIT AND COUNTERPARTY RISK 42,543 3,403 43,161 3,452 Credit risk 42,527 3,402 43,145 3,451 Credit risk - IRBA 9,305 744 9,485 759 Corporates 18 1 11 1 Institutions 102 8 65 5 Retail 9,185 735 9,409 753 Revolving exposures 4,929 394 5,521 442 Other exposures 4,256 341 3,889 311 Credit risk - Standardised approach 33,222 2,658 33,660 2,692 Central governments and central banks 77 6 78 6 Corporates 233 19 245 20 Institutions 253 20 138 11 Retail 31,025 2,482 31,948 2,555 Mortgages 12,495 1,000 12,455 996 Revolving exposures 2,076 166 2,063 165 Other exposures 16,454 1,316 17,430 1,394 5 Securitisation positions 266 21 209 17 Other non credit-obligation assets 1,368 109 1,042 83 Counterparty risk 16 1 16 1 Counterparty risk - Standardised approach 16 1 16 1 Institutions 16 1 16 1 EQUITY RISK 152 12 157 13 Internal model 152 12 157 13 Other equity exposures 152 12 157 13 MARKET RISK 124 10 49 4 Standardised approach 124 10 49 4 OPERATIONAL RISK 4,462 357 4,806 385 Advanced Measurement Approach (AMA) 1,738 139 2,555 204 Standardised approach 959 77 770 62 Basic indicator approach 1,765 141 1,481 119 TOTAL 47,281 3,783 48,173 3,854 (*) End of period.
2010 Registration document and fi nancial report - BNP PARIBAS 295 PILLAR 3 5 Appendix: capital requirements of signifi cant subsidiaries
BNP PARIBAS SUISSE SA
31 December 2010 31 December 2009 Risk-weighted Capital Risk-weighted Capital In millions of euros assets (*) Requirement (*) assets (*) Requirement (*) CREDIT AND COUNTERPARTY RISK 11,408 913 9,566 766 Credit risk 11,393 911 9,557 765 Credit risk - IRBA 9,056 724 8,820 705 Central governments and central banks 7150 Corporates 7,873 630 7,943 635 Institutions 1,176 94 872 70 Credit risk - Standardised approach 2,337 187 737 60 Corporates 1,116 89 343 27 Retail 819 66 185 15 Other exposures 819 66 185 15 Other non credit-obligation assets 402 32 209 18 Counterparty risk 15191 Counterparty risk - Standardised approach 15 1 9 1 Corporates 15 1 9 1 EQUITY RISK 1 0 1 0 5 Internal model 1 0 1 0 Other equity exposures 1 0 1 0 OPERATIONAL RISK 916 73 729 58 Advanced Measurement Approach (AMA) 916 73 729 58 TOTAL 12,325 986 10,296 824 (*) End of period.
296 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY 6 FINANCIAL STATEMENTS
6.1 BNP Paribas SA fi nancial statements 298 Profi t and loss account for the year ended 31 December 2010 298 Balance sheet at 31 December 2010 299
Notes to the parent company financial statements 300 Note 1 Summary of signifi cant accounting policies applied by BNP Paribas SA 300 Note 2 Notes to the profi t and loss account for 2010 307 Note 3 Notes to the balance sheet at 31 december 2010 309 Note 4 Financing and guarantee commitments 319 Note 5 Salaries and employee benefi ts 320 Note 6 Additional information 322
6.2 Appropriation of income and dividend distribution for the year ended 31 December 2010 329
6.3 BNP Paribas SA fi ve-year fi nancial summary 330
6.4 Subsidiaries and associated companies of BNP Paribas SA at 31 December 2010 331
6.5 Details of equity interests acquired by BNP Paribas SA in 2010 whose value exceeds 5% of the share capital of a French company 334
6.6 Statutory Auditors’ report on the fi nancial statements 335
2010 Registration document and fi nancial report - BNP PARIBAS 297 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 BNP Paribas SA fi nancial statements
6.1 BNP Paribas SA fi nancial statements
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2010
In millions of euros, at 31 December Note 2010 2009 Interest income 2.a 21,516 23,509 Interest expense 2.a (15,261) (17,611) Income on equities and other variable instruments 2.b 1,796 2,257 Commission income 2.c 4,878 4,481 Commission expense 2.c (1,047) (1,418) Gains (losses) on trading account securities 2,533 4,325 Gains (losses) on securities available for sale (788) 382 Other banking income 180 139 Other banking expenses (194) (203) REVENUES 13,613 15,861 Salaries and employee benefi t expenses 5.a (5,517) (5,551) Other administrative expenses (3,103) (2,533) Depreciation, amortisation, and provisions on tangible and intangible assets (507) (471) GROSS OPERATING INCOME 4,485 7,306 Cost of risk 2.d (1,289) (2,379) OPERATING INCOME 3,196 4,927 Net gain (loss) on disposals of long-term investments 2.e 343 (404) Net addition to regulated provisions 43 26 6 INCOME BEFORE TAX 3,583 4,549 Corporate income tax 2.f (118) (540) NET INCOME 3,465 4,009
298 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS BNP Paribas SA fi nancial statements 6
BALANCE SHEET AT 31 DECEMBER 2010
In millions of euros, at Note 31 December 2010 31 December 2009 ASSETS Cash and amounts due from central banks and post offi ce banks 23,453 27,845 Treasury bills and money-market instruments 3.c 136,232 115,249 Due from credit institutions 3.a 336,700 355,813 Customer items 3.b 365,772 310,232 Bonds and other fi xed-income securities 3.c 95,816 103,687 Equities and other variable-income securities 3.c 8,717 6,243 Investments in subsidiaries and equity securities held for long-term investment 3.c 4,924 5,522 Affi liates 3.c 55,266 51,605 Leasing receivables 94 47 Intangible assets 3.i 6,124 5,438 Tangible assets 3.i 2,185 2,200 Treasury shares 3.d 68 108 Other assets 3.g 189,633 182,349 Accrued income 3.h 73,190 70,915 TOTAL ASSETS 1,298,176 1,237,253 LIABILITIES Due to central banks and post offi ce banks 1,714 5,094 Due to credit institutions 3.a 365,432 385,104 Customer items 3.b 324,378 290,599 Debt securities 3.f 173,946 155,940 Other liabilities 3.g 295,004 267,296 Accrued expenses 3.h 60,779 55,395 6 Provisions 3.j 3,070 2,891 Subordinated debt 3.k 21,083 24,389 TOTAL LIABILITIES 1,245,406 1,186,708 SHAREHOLDERS’ EQUITY 6.b Share capital 2,397 2,371 Additional paid-in capital 21,850 21,331 Retained earnings 25,059 22,834 Net income 3,465 4,009 TOTAL SHAREHOLDERS’ EQUITY 52,770 50,545 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 1,298,176 1,237,253
Off-Balance Sheet Items Note 31 December 2010 31 December 2009 COMMITMENTS GIVEN Financing commitments 4.a 210,259 182,137 Guarantee commitments 4.b 141,933 122,932 Commitments given on securities 370 593 COMMITMENTS RECEIVED Financing commitments 4.a 105,266 87,554 Guarantee commitments 4.b 185,441 146,344 Commitments received on securities 135 15
2010 Registration document and fi nancial report - BNP PARIBAS 299 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Notes to the parent company fi nancial statements
Notes to the parent company fi nancial statements
Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES APPLIED BY BNP PARIBAS SA
BNP Paribas SA’s fi nancial statements have been prepared in accordance The Bank recognises an impairment for doubtful accounts on these with the accounting principles applied to credit institutions in France. loans, of an amount corresponding to the difference between the total loan value and current value of the future cash fl ows (from principal, interest, and any realised guarantees) that are deemed recoverable, using a discount rate equal to the original effective interest rate for fi xed- AMOUNTS DUE FROM CREDIT INSTITUTIONS rate loans, or the most recent contractual interest rate for fl oating-rate AND CUSTOMERS loans. The guarantees considered here include mortgages and pledges on Amounts due from credit institutions include all subordinated and assets, as well as credit derivatives acquired by the Bank as a protection unsubordinated loans made in connection with banking transactions against credit losses in the loan book. with credit institutions, with the exception of debt securities. They also If a loan is restructured because the borrower is facing financial include assets purchased under resale agreements, whatever the type of diffi culties, the Bank calculates a discount at the current value of the assets concerned, and receivables corresponding to securities sold under difference between the old and new repayment terms. These discounts collateralised repurchase agreements. They are broken down between are recognised as a deduction to assets and reversed through income on demand loans and deposits and term loans and time deposits. an actuarial basis over the remaining term of the loan. If any instalments Amounts due from customers include loans to customers other than credit on a restructured loan are not paid, the loan is permanently reclassifi ed institutions, with the exception of loans represented by debt securities as irrecoverable regardless of the terms of the restructuring. issued by customers, assets purchased under resale agreements, In the case of doubtful loans where the borrower has resumed making whatever the type of assets concerned, and receivables corresponding regular payments in accordance with the original repayment schedule, the to securities sold under collateralised repurchase agreements. They are loan is reclassifi ed as sound. Doubtful loans that have been restructured broken down between commercial loans, customer accounts in debit, are also reclassifi ed as sound, provided that the restructuring terms and other loans. are met. Amounts due from credit institutions and customers are recorded in the Irrecoverable loans include loans to borrowers whose credit standing 6 balance sheet at nominal value plus accrued interest not yet due. is such that after a reasonable time recorded in doubtful loans, no Outstanding loans and confi rmed credit facilities are classifi ed into sound reclassifi cation as a sound loan is foreseeable, loans where an event of loans - including sound restructured loans - and doubtful loans. The default has occurred, almost all restructured loans where the borrower same analysis is performed for credit risks attached to forward fi nancial has once again defaulted, and loans classifi ed as doubtful for more than instruments whose present value represents an asset for the Group. one year that are in default and are not secured by guarantees covering a substantial portion of the amount due. Credit risks on outstanding loans and confi rmed credit facilities are monitored with an internal rating system, that is based on two key Impairments for credit risks on assets are deducted from the carrying parameters: the probability of default by the counterparty, expressed amount of the assets. Provisions recorded under liabilities include as a rating, and the overall recovery rate determined by reference to provisions related to off-balance sheet commitments, provisions for the type of transaction. There are 12 counterparty ratings, ten covering losses on interests in real estate development programmes, provisions sound loans and two covering doubtful loans and loans classifi ed as for claims and litigation, provisions for unidentifi ed contingencies and irrecoverable. provisions for unforeseeable industry risks. Doubtful loans are defi ned as loans where the Bank considers that Additions to and recoveries of provisions and write-offs, losses on there is a risk that the borrowers will be unable to honour all or part irrecoverable loans, recoveries on loans covered by provisions and of their commitments. This is the case for all loans on which one or discounts calculated on restructured loans are recorded in the profi t more installments are more than three months overdue (six months in and loss account under “Cost of risk”. the case of real estate loans or loans to local governments), as well as The interest received from the repayment of the carrying amount of loans loans for which legal procedures have been launched. When a loan is that have been written-down, as well as the reversals of discounting classifi ed as doubtful, all other loans and commitments to the debtor effects and the discount on restructured loans, are recognised under are automatically assigned the same classifi cation. “Interest income”.
300 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Notes to the parent company fi nancial statements 6
REGULATED SAVINGS AND LOAN CONTRACTS SECURITIES Home savings accounts (Comptes Épargne Logement, or CELs) and home The term “securities” covers interbank market securities, Treasury bills savings plans (Plans d’Épargne Logement, or PELs) are government- and negotiable certifi cates of deposit, bonds and other Fixed Income regulated retail products sold in France. They combine a savings phase securities (whether fixed- or floating-rate) and equities and other and a loan phase, which are inseparable, with the loan phase contingent variable-income securities. upon the savings phase. In application the CRC standard 2005-01, securities are classifi ed as These products contain two types of obligations for BNP Paribas: (i) an “Trading account securities”, “Securities available for sale”, “Equity obligation to pay interest on the savings for an indefi nite period, at a rate securities available for sale in the medium-term”, “Debt securities set by the government on inception of the contract (in the case of home held to maturity”, “Equity securities held for long-term investment”, or savings plans) or at a rate reset every six months using an indexation “Investments in subsidiaries and affi liates”. formula set by law (in the case of home savings accounts); and (ii) an Investments in companies accounted for under the equity method are obligation to lend to the customer (at the customer’s option) an amount recorded on a separate line of the consolidated balance sheet. When a contingent upon the rights acquired during the savings phase, at a rate credit risk has occurred, Fixed Income securities held in the “available for set on inception of the contract (in the case of home savings plans) or at sale” or “held to maturity” portfolio are classifi ed as doubtful, based on a rate contingent upon the savings phase (in the case of home savings the same criteria as those applied to doubtful loans and commitments. accounts). When securities exposed to counterparty risk are classifi ed as doubtful BNP Paribas SA’s future obligations, with respect to each generation of and the related provision can be separately identifi ed, the corresponding PELs and CELs (in the case of PELs, a generation comprises all products charge is included in “Cost of risk”. with the same interest rate at inception; for CELs, all such products constitute one single generation) are measured by discounting potential Trading account securities future earnings from at-risk outstandings for those generations. At-risk outstandings are estimated on the basis of a historical analysis of “Trading account securities” are securities bought or sold with the customer behaviour, and equate to statistically probable loan outstandings intention of selling them or repurchasing them in the near-future, as and the difference between statistically probable outstandings and well as those held as a result of market-making activities. These securities minimum expected outstandings, with minimum expected outstandings are valued individually at market value if they meet the following criteria: being deemed equivalent to unconditional term deposits. ■ they can be traded on an active market (i.e., a market where third Earnings for future periods from the savings phase are estimated as the parties have continuous access to market prices through a securities difference between (i) the reinvestment rate and (ii) the fi xed savings exchange, brokers, traders, or market-makers); interest rate on at-risk savings outstandings for the period in question. ■ the market prices refl ect actual, regularly-occurring transactions Earnings for future periods from the loan phase are estimated as the taking place under normal competition. difference between (i) the refi nancing rate and (ii) the fi xed loan interest “Trading account securities” also include securities bought or sold for rate on at-risk loan outstandings for the period in question. specifi c asset management objectives (especially in terms of sensitivity) 6 The reinvestment rate for savings and the refi nancing rate for loans for trading books comprised of forward fi nancial instruments, securities, are derived from the swap yield curve and from the spreads expected or other fi nancial instruments taken globally. on financial instruments of similar type and maturity. Spreads are Changes in the market value of these securities are recognised in income. determined on the basis of actual spreads on (i) fi xed rate home loans “Trading account securities” cannot be reclassifi ed into another category, in the case of the loan phase and (ii) euro-denominated life insurance and must follow the valuation rules for this category until they are sold, products in the case of the savings phase. fully redeemed, or recognised as a loss and consequently removed from In order to refl ect the uncertainty of future interest rate trends, and the balance sheet. the impact of such trends on customer behaviour models and on at- In the case of exceptional circumstances necessitating a change in risk outstandings, the obligations are estimated using the Monte Carlo investment strategy, “Trading account securities” can be reclassifi ed method. as “Securities available for sale” or “Debt securities held to maturity” When the sum of BNP Paribas SA’s estimated future obligations with depending on the new strategy. respect to the savings and loan phases of any generation of contracts, If fi xed-income securities classifi ed as “Trading account securities” can no indicates a potentially unfavourable situation for BNP Paribas SA, a longer be traded on an active market, and if the Bank has the intention provision is recognised (with no offset between generations) in the and ability to hold these securities for the foreseeable future or until balance sheet under “Provisions”. Movements in this provision are maturity, they can be reclassifi ed as “Securities available for sale” or recognised as interest income in the profi t and loss account. “Debt securities held to maturity”. The accounting rules for the new category would apply to reclassifi ed securities as of the reclassifi cation date.
2010 Registration document and fi nancial report - BNP PARIBAS 301 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Notes to the parent company fi nancial statements
If the market in which securities classifi ed as “Trading account securities” Debt securities held to maturity were purchased can no longer be considered active, the securities will be valued using methods that take into account the new market conditions. Fixed income securities with a specified maturity (mainly bonds, interbank market securities, Treasury bills and other negotiable debt securities) are recorded under “Debt securities held to maturity” to refl ect Securities available for sale BNP Paribas SA’s intention of holding them to maturity. The “Securities available for sale” category includes securities not Bonds classifi ed under this heading are fi nanced by matching funds or classifi ed into one of the other categories. hedged against interest rate exposure to maturity. Bonds and other fi xed-income securities are valued at the lower of cost The difference between cost and the redemption price of these securities (excluding accrued interest) or probable market value, which is generally is recognised in income using the actuarial method. In the balance sheet, determined on the basis of stock market prices. Accrued interest is posted their carrying amount is amortised to their redemption value over their to the profi t and loss account under “Interest income on bonds and other remaining life. fi xed-income securities”. Interest on debt securities held to maturity is recorded in the profi t and The difference between cost and the redemption price of Fixed Income loss account under “Interest income on bonds and other fi xed-income securities purchased on the secondary market is recognised in income securities”. using the actuarial method. In the balance sheet, their carrying amount is amortised to their redemption value over their remaining life. An impairment is recognised when a decline in the credit standing of an issuer jeopardises redemption at maturity. Equities are valued at the lower of cost and probable market value, which is generally determined on the basis of stock market prices, for If a signifi cant portion of the “Debt securities held to maturity” is sold or listed equities, or the BNP Paribas SA’s share in net assets calculated on reclassifi ed into a different category, the sold or reclassifi ed securities the basis of the most recent fi nancial statements available, for unlisted cannot be returned to the “Debt securities held to maturity” category at equities. Dividends received are recognised in income under “Income on any time during the current fi nancial period or the following two nancialfi equities and other variable income instruments” on a cash basis. years. All the securities classifi ed as “Debt securities held to maturity” would then be reclassifi ed as “Equity securities available for sale in the The cost securities available for sale is determined on a fi rst in, first out medium-term”. (FIFO) basis. Disposal gains or losses and additions to and reversals of lower of cost and market provisions are refl ected in the profi t and loss If exceptional market circumstances necessitate a change in investment account under “Gains (losses) on securities available for sale”. strategy, and “Trading account securities” and “Securities available for sale” are reclassifi ed as “Debt securities held to maturity”, the sale of In the case of exceptional circumstances necessitating a change in any “Debt securities held to maturity” prior to the maturity date, if the investment strategy, or if the securities can no longer be traded on an sale occurred because the securities had once again become tradable active market, securities classifi ed as “Securities available for sale” may on an active market, would not invoke the reclassifi cation clauses in the be reclassifi ed as “Debt securities held to maturity” and must be identifi ed above paragraph. within this portfolio. These securities would then be recognised according to the method used for “Debt securities held to maturity”. 6 Equity securities held for long-term investment, investments in subsidiaries and Equity securities available for sale in the affiliates medium-term Investments in non-consolidated undertakings include investments in The “Equity securities available for sale in the medium-term” comprises affi liates in which BNP Paribas SA exercises signifi cant infl uence over investments made for portfolio management purposes, with the aim of management and investments considered strategic to BNP Paribas realising a profi t in the medium term without investing on a long-term SA’s business development. This infl uence is deemed to exist when basis in the development of the issuer’s business. This category includes BNP Paribas SA holds an ownership interest of at least 10%. venture capital investments. Equity securities held for long-term investment are shares and related “Equity securities available for sale in the medium-term” are recorded instruments that BNP Paribas SA intends to hold on a long-term basis individually at the lower of cost and fair value. Fair value takes into in order to earn a satisfactory long-term rate of return without taking account the issuer’s general business outlook and the planned holding an active part in the management of the issuing company but with the period. The fair value of listed stocks corresponds primarily to the average intention of promoting the development of lasting business relationships stock market price determined over a one-month period. by creating special ties with the issuer. Other participating interests consist of shares and other variable income investments in companies over which BNP Paribas SA has exclusive control (i.e., companies that could be fully incorporated into the Group).
302 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Notes to the parent company fi nancial statements 6
These types of securities are recorded individually at the lower of cost FIXED ASSETS and fair value. Fair value is determined based on available information Buildings and equipment are stated at acquisition cost or at the adjusted using a multi-criteria valuation approach, including the discounted future value determined in accordance with France’s appropriation laws of 1977 cash fl ows, sum-of-the-digits and net asset value methods as well as and 1978. Reevaluation differences on non-depreciable assets, recorded an analysis of ratios commonly used to assess future yields and exit at the time of these legal reevaluations, are included in share capital. opportunities for each line of securities. The fair value of listed securities is considered to be at least equal to cost if the stock market price at Fixed assets are initially recognised at purchase price plus directly period-end is no more than 20% below cost and the stock market price attributable costs, together with borrowing costs where a long period of has not been below cost for the preceding twelve consecutive months. construction or adaptation is required before the asset can be brought into service. If these conditions are not met, and if a multi-criteria valuation shows that an impairment should be recognised on the carrying amount, the Software developed internally by BNP Paribas SA that fulfi l the criteria for fair value is considered to be equal to the stock market price. The same capitalisation is capitalised at direct development cost, which includes holds true if the stock market price is less than cost for sixty consecutive external costs and the labour costs of employees directly attributable months or if the closing stock market price is less than 50% of cost. For to the project. simplicity, listed securities acquired for less than EUR 10 million may be Subsequent to initial recognition, fi xed assets are measured at cost less valued based on the average closing stock market price. accumulated depreciation or amortisation and any impairment losses. Disposal gains and losses and provision movements are recorded in Fixed assets are depreciated or amortised using the straight-line the profi t and loss account under “Net gain (loss) on disposals of xedfi method over the useful life of the asset. Depreciation and amortisation assets”. expense is recognised in the profi t and loss account under “Depreciation, Dividends are recorded under “Income from variable income securities” amortisation, and provisions on tangible and intangible assets”. when they have been declared by the issuers’ shareholders, or, if the The portion of recognised depreciation or amortisation that exceeds the shareholders’ decision is not known, when they are received. accounting depreciation or amortisation calculated on a straight-line basis is recorded in the balance sheet as a liability, under “Regulatory Treasury shares provisions: accelerated depreciation and amortisation”. BNP Paribas Treasury shares held by BNP Paribas SA are classifi ed and valued as SA does not calculate the tax effects of accelerated depreciation and follows: amortisation. When an asset consists of a number of components that may require ■ treasury shares purchased under a market-making agreement or acquired in connection with index arbitrage transactions are recorded replacement at regular intervals, or that have different uses or different under “Trading account securities” at market price; patterns of consumption of economic benefits, each component is recognised separately and depreciated using a method appropriate to ■ treasury shares held for allocation to employees are recorded at the that component. BNP Paribas SA has adopted the component-based lower of cost and market price under “Securities available for sale”. approach for property used in operations and for investment property. Where appropriate, an impairment is recognised for the difference 6 between the cost of the shares and the option exercise price for The depreciation periods used for offi ce property are as follows: 80 years BNP Paribas employees (this difference is zero for share awards). The or 60 years for the shell (for prime and other property respectively); 30 portion of shares granted to employees of BNP Paribas SA subsidiaries years for facades; 20 years for general and technical installations; and is charged to the subsidiaries over the vesting period. 10 years for fi xtures and fittings. Pursuant to CRC Regulation 2008-17 dated 30 December 2008, Software is amortised, depending on its type, over periods of no more BNP Paribas SA changed this accounting method so that treasury shares than 8 years in the case of infrastructure developments and 3 years or held for allocation to employees are valued according to the procedure 5 years in the case of software developed primarily for the purpose of set forth in CRC Regulation 2008-15 concerning the accounting of stock providing services to customers. options and share awards. Under CRC Regulation 2008-15, such treasury Depreciable fi xed assets are tested for impairment if there is an indication shares are not impaired, but a provision is recognised for these shares of potential impairment at the balance sheet date. Non-depreciable based on the services provided by the employees who will receive the assets are tested for impairment annually. shares. BNP Paribas SA has not applied CRC Regulations 2008-15 and 2008-17 retroactively; If there is an indication of impairment, the new recoverable amount of the asset is compared with the carrying amount. If the asset is found ■ treasury shares that are intended to be cancelled or that are not to be impaired, an impairment loss is recognised in the profi t and loss being held for either of the above reasons are included in long-term account. This loss is reversed in the event of a change in the estimated investments. Treasury shares intended to be cancelled are stated at recoverable amount or if there is no longer an indication of impairment. cost; all others are stated at the lower of cost and fair value. Impairment losses are taken into account in the profi t and loss account under “Depreciation, amortisation, and provisions on tangible and intangible assets”. Gains and losses on disposals of property, plant, equipment, and intangible assets used in operations are recognised in the profi t and loss account under “Net gain (loss) on disposals of fi xed assets”.
2010 Registration document and fi nancial report - BNP PARIBAS 303 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Notes to the parent company fi nancial statements
AMOUNTS DUE TO CREDIT INSTITUTIONS FORWARD FINANCIAL INSTRUMENTS AND CUSTOMERS Forward fi nancial instruments are purchased on various markets for use Amounts due to credit institutions are classifi ed into demand accounts as specifi c or general hedges of assets and liabilities, or for transaction and time deposits and borrowings. Customer deposits are classifi ed into purposes. regulated savings accounts and other customer deposits. These sections The Bank’s commitments related to these instruments are recognised include securities and other assets sold under repurchase agreements. off-balance sheet at nominal value. The accounting treatment of these Accrued interest is recorded on a separate line. instruments depends on the corresponding investment strategy.
Derivatives held for hedging purposes DEBT SECURITIES Income and expenses related to forward derivatives held for hedging Debt securities are broken down between retail certifi cates of deposit, purposes and designated to one instrument or a group of homogeneous interbank market securities, negotiable certifi cates of deposit, bonds and instruments are recognised in income symmetrically with the income and other debt instruments. This section does not include subordinated notes expenses on the underlying instrument, and under the same heading. which are recorded under “Subordinated debt”. Income and expenses related to forward fi nancial instruments used to Accrued interest on debt securities is recorded on a separate line of the hedge overall interest rate risk are recognised in income on a prorata balance sheet and is debited to the profi t and loss account. basis. Bond issue and redemption premiums are amortised using the yield- to-maturity method over the life of the bonds. Bond issuance costs are Derivatives held for transaction purposes amortised by the straight-line method over the life of the bonds. Derivatives held for transaction purposes can be traded on organised markets or over-the-counter. Derivates held within a trading book are valued at market value on the PROVISIONS FOR INTERNATIONAL balance sheet date. The corresponding gains and losses (realised and COMMITMENTS unrealised) are recognised in income under “Gains (losses) on trading account securities”. Provisions for international commitments are based on the evaluation of non-transfer risk related to the future solvency of each of the countries at The market value is determined from either: risk and on the systemic credit risk incurred by debtors in the event of a ■ the listed price, if one is available; constant and durable deterioration of the overall situation and economies ■ or a valuation method using recognised fi nancial models and theories of these countries. Allocations and reversals of these provisions are with parameters calculated from transaction prices observed on active refl ected in the profi t and loss account under “Cost of risk”. markets, or from statistical or other quantitative methods. In both cases, BNP Paribas SA makes conservative value adjustments to 6 account for modelling, counterparty, and liquidity risks. PROVISIONS FOR ITEMS NOT RELATED TO Some complex derivatives, which are typically custom-made from BANKING TRANSACTIONS combined instruments and highly illiquid, are valued using models where BNP Paribas SA records provisions for clearly identifi ed contingencies certain parameters are not observable on an active market. and charges, of uncertain timing or amount. In accordance with current Until 31 December 2004, the Bank recognised gains from trading these regulations, these provisions for items not related to banking transactions complex derivatives immediately in income. may be recorded only if the Bank has an obligation to a third party at However, on 1 January 2005, the Bank began recognising these gains year-end, there is a high probability of an outfl ow of resources to the in income over the period during which the valuation parameters are third party, and no equivalent economic benefi ts are expected in return expected to be unobservable. If, during this period, the parameters from the third party. do become observable or a justifi able valuation can be obtained by comparison with recent, similar transactions on an active market, the part of the remaining unrecognised gains directly in income. COST OF RISK The “Cost of risk” line item includes expenses arising from the Other derivatives transactions identifi cation of counterparty risks, litigation, and fraud inherent to Gains and losses on over-the-counter contracts representing isolated banking transactions conducted with third parties. Net movements in open positions are recognised in income when the contracts are settled provisions that do not fall under the category of such risks are classifi ed or on a prorata basis, depending on the nature of the instruments. in the profi t and loss account according to their type. A provision for unrealised losses is recognised for each group of homogeneous contracts.
304 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Notes to the parent company fi nancial statements 6
CORPORATE INCOME TAX payment of share-based variable compensation is explicitly subject to the employee’s continued presence on the vesting date, the services A charge for corporate income tax is taken in the period in which the are presumed to have been rendered during the vesting period and the related taxable income and expenses are booked, regardless of the period corresponding compensation expense is recognised on a pro rata basis in which the tax is actually paid. BNP Paribas SA recognises deferred over that period. The expense is recognised in “Salaries and employee tax for all temporary differences between the book value of assets and benefi ts” with a corresponding liability in the balance sheet. It is revised liabilities and their tax basis according to the liability method. Recognition to take account of any non-fulfi lment of the continued presence or of deferred tax assets depends on the probability of recovery. performance conditions and the change in BNP Paribas share price. If there is no continued presence condition, the expense is not deferred but recognised immediately with a corresponding liability in the balance EMPLOYEE PROFIT-SHARING sheet, which is then revised on each reporting date until settlement, to As required by French law, BNP Paribas SA provides for employee profi t- account for any performance conditions and the change in BNP Paribas sharing in the year in which the profi t arises and reports the provision share price. under “Salaries and employee benefi t expenses” in the profi t and loss account. Post-employment benefits The post-employment benefi ts provided to BNP Paribas SA employees in France include both defi ned-contribution plans and defi ned-benefi t plans. EMPLOYEE BENEFITS Defined-contribution plans, such as Caisse Nationale d’Assurance BNP Paribas SA employees receive each of the following four types of Vieillesse and supplemental national and trade union schemes that pay benefi ts: pensions to former BNP Paribas SA employees in France, do not give rise to an obligation for BNP Paribas SA and consequently do not require a ■ termination benefi ts, payable primarily in the case of early termination provision. The amount of employer’s contributions payable during the of an employment contract; period is recognised as an expense. ■ short-term benefi ts such as salary, annual leave, incentive plans, profi t-sharing and additional payments, Only defi ned-benefi t plans, such as the retirement packages paid for by BNP Paribas SA’s retirement fund, give rise to an obligation for ■ long-term benefi ts, including compensated absences, long-service BNP Paribas SA. This obligation must be measured and recognised as a awards, and other types of cash-based deferred compensation; liability by means of a provision. ■ post-employment benefi ts, including top-up banking industry pensions The classifi cation of plans into these two categories is based on the in France and pension plans in other countries, some of which are economic substance of the plan, which is reviewed to determine whether operated through pension funds. BNP Paribas SA has a legal or constructive obligation to pay the agreed benefi ts to employees. Termination benefits Post-employment benefi t obligations under defi ned-benefi t plans are 6 Termination benefi ts are employee benefi ts payable as a result of a measured using actuarial techniques that take into account demographic decision by BNP Paribas SA to terminate a contract of employment and fi nancial assumptions. The amount of the obligation recognised as before the legal retirement age or by an employee to accept voluntary a liability is measured on the basis of the actuarial assumptions applied redundancy in exchange for a benefi t. Termination benefi ts falling due by BNP Paribas SA, using the projected unit credit method. This method more than 12 months after the closing date are discounted. takes account of various parameters such as demographic assumptions, the probability that employees will leave before retirement age, salary Short-term benefits infl ation, a discount rate, and the general infl ation rate. The value of any BNP Paribas SA recognises an expense when it has used services rendered plan assets is deducted from the amount of the obligation. by employees in exchange for employee benefi ts. The amount of the obligation under a plan, and the value of the plan assets, may show signifi cant fl uctuations from one period to the next Long-term benefits due to changes in actuarial assumptions, thereby giving rise to actuarial gains and losses. BNP Paribas SA applies the corridor method to account Long-term benefi ts are benefi ts (other than post-employment benefi ts for actuarial gains and losses. Under this method, BNP Paribas SA is and termination benefi ts) which do not fall wholly due within 12 months allowed to recognise, as from the following period and over the average after the end of the period in which the employee renders the associated remaining service lives of employees, only that portion of actuarial gains services. The actuarial techniques used are similar to those used for and losses that exceeds the greater of (i) 10% of the present value of the defi ned-benefi t post-employment benefi ts, except that actuarial gains gross defi ned-benefi t obligation or (ii) 10% of the fair value of plan assets and losses are recognised immediately, as are the effects of any plan at the end of the previous period. amendments. The effects of plan amendments on past service costs are recognised in This relates in particular to cash compensation deferred for more than profi t or loss over the full vesting period of the amended benefi ts. 12 months, which is accrued in the fi nancial statements for the period during which the employee provides the corresponding services. If the
2010 Registration document and fi nancial report - BNP PARIBAS 305 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Notes to the parent company fi nancial statements
The annual expense recognised in the profi t and loss account under FOREIGN CURRENCY TRANSACTIONS “Salaries and employee benefi t expenses” with respect to defi ned-benefi t Foreign exchange positions are generally valued at the offi cial year-end plans, is comprised of the current service cost (the rights vested in each exchange rate. Exchange gains and losses on transactions in foreign employee during the period in return for services rendered), interest cost currency carried out in the normal course of business are recognised in (the effect of discounting the obligation), the expected return on plan the profi t and loss account. assets, amortisation of actuarial gains and losses and past service cost arising from plan amendments, and the effect of any plan curtailments Exchange differences arising from the conversion of assets held on a long- or settlements. term basis, including equity securities held for long-term investment, the capital made available to branches, and other foreign equity investments, denominated in foreign currencies and fi nanced in euros, are recognised as translation adjustments for the balance sheet line items recording RECOGNITION OF REVENUE AND EXPENSES the assets. Interest and fees and commissions qualifi ed as interest are recognised on Exchange differences arising from the conversion of assets held on a long- an accruals basis, and include the commissions charged by the Bank as term basis, including equity securities held for long-term investment, the part of an overall loan package (i.e., application fees, commitment fees, capital made available to branches, and other foreign equity investments, participation fees, etc.). The marginal transaction costs that the Bank denominated and financed in foreign currencies, are recognised must pay when granting or acquiring loans are also spread out over the symmetrically as translation differences for the corresponding fi nancing. effective life of the corresponding loan. On 1 January 2010 the Group began applying CRC (Comité de la Réglementation Comptable) Regulation 2009-03 on the recognition of FOREIGN CURRENCY TRANSLATION commissions received by credit institutions and of marginal transaction costs arising from the granting or acquisition of loans. The fi rst-time Monetary and non-monetary foreign currency-denominated assets and application of this Regulation did not have a material effect on the liabilities of foreign branches have been translated into euros at the year- Company’s fi nancial statements. end exchange rate. Translation adjustments regarding the capital made available to BNP Paribas SA branches outside of France are included in Fees and commissions not qualifi ed as interest that relate to the provision “Accrued income” and “Accrued expenses”. of services are recognised when the service is performed or, for ongoing services, on a prorated basis over the length of the service agreement.
6
306 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Notes to the parent company fi nancial statements 6
Note 2 NOTES TO THE PROFIT AND LOSS ACCOUNT FOR 2010
2.a NET INTEREST INCOME on fi nancial instruments at fair value through profi t or loss (excluding accrued interest) is recognised under “Gains (losses) on trading account BNP Paribas SA includes in “Interest income” and “Interest expense” all securities”. income and expense from fi nancial instruments measured at amortised cost and from fi nancial instruments measured at fair value that do not Interest income and expense on derivatives accounted for as fair value meet the defi nition of a derivative instrument. The change in fair value hedges are included with the revenues generated by the hedged item.
2010 2009 In millions of euros Income Expenses Income Expenses Credit institutions 5,682 (4,878) 7,362 (6,607) Demand accounts, loans, and borrowings 4,911 (3,902) 5,728 (4,753) Securities under repurchase agreements 683 (977) 1,526 (1,854) Subordinated loans 87 108 Customers items 9,092 (4,186) 9,543 (3,780) Demand accounts, loans, and term accounts 8,860 (3,861) 9,095 (3,223) Securities given and received under repurchase agreements 200 (326) 410 (557) Subordinated loans 32 38 Finance leases 19 (17) 23 (20) Debt securities 873 (4,491) 789 (5,208) Bonds and other fi xed-income securities 5,850 5,792 Trading account securities 1,453 1,950 Securities available for sale 3,940 3,092 Debt securities held to maturity 456 477 Industrial development securities related to France’s Sustainable Development Savings Accounts - 273 6 Macro-hedging instruments (1,688) (1,996) TOTAL INTEREST INCOME AND EXPENSES 21,516 (15,261) 23,509 (17,611)
2.b INCOME ON EQUITIES AND OTHER VARIABLE INCOME INSTRUMENTS In millions of euros 2010 2009 Securities available for sale 63 98 Investments in subsidiaries and equity securities held for long-term investment 278 292 Affi liates 1,454 1,867 TOTAL INCOME ON EQUITIES AND OTHER VARIABLE INCOME INSTRUMENTS 1,796 2,257
2010 Registration document and fi nancial report - BNP PARIBAS 307 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Notes to the parent company fi nancial statements
2.c COMMISSIONS 2010 2009 In millions of euros Income Expenses Income Expenses Commissions on banking and fi nancing transactions 2,472 (796) 2,290 (1,191) Customer items 2,012 (134) 1,722 (136) Other 461 (663) 568 (1,055) Commissions on fi nancial services 2,406 (250) 2,191 (227) TOTAL COMMISSION INCOME AND EXPENSES 4,878 (1,047) 4,481 (1,418)
2.d COST OF RISK AND PROVISION FOR CREDIT RISKS Cost of risk represents the net amount of impairment losses recognised with respect to credit risks inherent to BNP Paribas SA’s banking intermediation activities, plus any impairment losses in the case of known counterparty risk on over-the-counter instruments.
In millions of euros 2010 2009 Net additions and reversals to provisions (1,188) (2,335) Customer items and credit institutions (954) (1,790) Off-balance sheet commitments (114) (84) Securities (25) (303) Doubtful loans 37 (97) Financial instruments for market activities (132) (61) Irrecoverable loans not covered by provisions (145) (91) Recoveries of loans written-off 44 47 COST OF RISK (1,289) (2,379)
In millions of euros 2010 2009 6 Balance at 1 January 7,837 6,433 Net additions and reversals to provisions 1,188 2,335 Write-offs during the period covered by provisions (968) (1,018) Effect of movements in exchange rates and other 1,160 87 TOTAL PROVISION FOR CREDIT RISKS 9,217 7,837
The following table gives a breakdown of the provision for credit risk:
In millions of euros 2010 2009 Provisions deducted from assets 8,354 7,092 For amounts due from credit institutions (note 3.a) 653 371 For amounts due from customers (note 3.b) 6,876 5,697 For leasing transactions 42 For securities 326 427 For fi nancial instruments for market activities 495 595 Provisions recognised as liabilities (note 3.j) 863 745 For off-balance sheet commitments 720 578 For doubtful loans 144 167 TOTAL PROVISION FOR CREDIT RISKS 9,217 7,837
308 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Notes to the parent company fi nancial statements 6
2.e NET GAIN (LOSS) ON DISPOSALS OF LONG-TERM INVESTMENTS 2010 2009 In millions of euros Income Expenses Income Expenses Investments in subsidiaries and equity securities held for long-term investment 391 (771) 647 (650) Divestments 48 (52) 229 (51) Provisions 343 (719) 418 (599) Investments in affi liates 1,186 (550) 464 (867) Divestments 1,068 (3) 399 (42) Provisions 118 (547) 65 (825) Operating assets 90 (2) 4 (2) TOTAL 1,667 (1,323) 1,115 (1,519) NET GAIN (LOSS) ON DISPOSALS OF LONG-TERM ASSETS 343 (404)
2.f CORPORATE INCOME TAX In millions of euros 2010 2009 Current tax expense (291) 14 Deferred tax expense 173 (554) TOTAL CORPORATE INCOME TAX EXPENSE (118) (540)
Note 3 NOTES TO THE BALANCE SHEET AT 31 DECEMBER 2010
3.a AMOUNTS DUE FROM AND DUE TO CREDIT INSTITUTIONS 6 In millions of euros, at 31 December 2010 31 December 2009 Loans and receivables 216,268 235,419 Demand accounts 8,069 9,629 Term accounts and loans 202,779 220,782 Subordinated loans 5,420 5,008 Securities received under repurchase agreements 121,085 120,765 TOTAL LOANS AND RECEIVABLES DUE FROM CREDIT INSTITUTIONS BEFORE IMPAIRMENT 337,354 356,184 Of which accrued interest 1,040 1,302 Impairment on receivables due from credit institutions (note 2.d) (653) (371) TOTAL LOANS AND RECEIVABLES DUE FROM CREDIT INSTITUTIONS AFTER IMPAIRMENT 336,700 355,813
In millions of euros, at 31 December 2010 31 December 2009 Deposits and borrowings 229,498 247,709 Demand deposits 18,058 19,044 Term accounts and borrowings 211,440 228,665 Securities given under repurchase agreements 135,935 137,395 DUE TO CREDIT INSTITUTIONS 365,432 385,104 Of which accrued interest 985 1,076
2010 Registration document and fi nancial report - BNP PARIBAS 309 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Notes to the parent company fi nancial statements
3.b CUSTOMER ITEMS In millions of euros, at 31 December 2010 31 December 2009 Loans and receivables 322,274 286,335 Commercial and industrial loans 2,286 1,519 Demand accounts 10,823 10,456 Short-term loans 66,652 59,630 Mortgages 69,742 61,807 Equipment loans 51,117 48,511 Export loans 17,175 15,389 Other customer loans 101,260 86,595 Subordinated loans 3,220 2,428 Securities received under repurchase agreements 50,374 29,594 TOTAL CUSTOMER ITEMS BEFORE IMPAIRMENT - ASSETS 372,648 315,928 Of which accrued interest 694 654 Of which loans eligible for refi nancing by Banque de France 236 139 Of which doubtful loans 5,137 4,378 Of which irrecoverable loans 5,339 4,501 Of which restructured loans 53 37 Impairment on receivables due from customers (note 2.d) (6,876) (5,697) TOTAL CUSTOMER ITEMS AFTER IMPAIRMENT - ASSETS 365,772 310,232
The following table gives the loans and receivables due from customers by counterparty. 31 December 2010 31 December 2009 Doubtful loans Doubtful loans In millions of euros, at Sound loans Net of provisions Total Sound loans Net of provisions Total Financial institutions 9,838 766 10,604 20,813 506 21,319 6 Companies 215,257 3,282 218,539 179,786 2,985 182,771 Entrepreneurs 12,666 344 13,010 10,945 191 11,136 Individuals 63,952 773 64,725 58,723 703 59,426 Other non-fi nancial customers 8,513 8 8,521 5,976 10 5,986 TOTAL 310,226 5,173 315,398 276,243 4,395 280,638
In millions of euros, at 31 December 2010 31 December 2009 Deposits 263,618 243,636 Demand deposits 69,584 57,528 Term deposits 147,864 143,041 Regulated savings accounts 46,170 43,067 Of which demand regulated savings accounts 33,726 30,997 Securities given under repurchase agreements 60,760 46,963 CUSTOMER ITEMS - LIABILITIES 324,378 290,599 Of which accrued interest 871 721
310 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Notes to the parent company fi nancial statements 6
3.c SECURITIES HELD BY BNP PARIBAS SA 31 December 2010 31 December 2009 Net carrying Net carrying In millions of euros, at amount Market value amount Market value Trading account securities 78,345 78,345 58,668 58,668 Securities available for sale 54,715 54,852 53,406 54,468 Of which provisions (1,414) (451) Debt securities held to maturity 3,172 3,299 3,175 3,396 TOTAL TREASURY BILLS AND MONEY-MARKET INSTRUMENTS 136,232 136,497 115,249 116,532 Of which receivables corresponding to loaned securities 15,883 7,211 Of which goodwill 1,159 727 Trading account securities 71,386 71,386 77,036 77,036 Securities available for sale 19,642 20,269 20,397 20,713 Of which provisions (972) (791) Debt securities held to maturity 4,789 4,942 6,254 7,047 Of which provisions (144) (164) TOTAL BONDS AND OTHER FIXED-INCOME SECURITIES 95,816 96,597 103,687 104,796 Of which unlisted securities 12,648 12,998 13,417 14,194 Of which accrued interest 1,624 1,527 Of which receivables corresponding to loaned securities 2,579 6,112 Of which goodwill (92) (44) Trading account securities 6,519 6,519 3,541 3,541 Securities available for sale 2,198 2,383 2,702 3,032 Of which provisions (248) (303) TOTAL EQUITIES AND OTHER VARIABLE-INCOME SECURITIES 8,717 8,902 6,243 6,573 Of which unlisted securities 2,306 2,460 1,780 1,972 Of which receivables corresponding to loaned securities 2,639 2,056 6 Investments in subsidiaries 4,210 5,667 4,772 5,864 Of which provisions (940) (320) Equity securities held for long-term investment 714 821 750 780 Of which provisions (120) (114) TOTAL INVESTMENTS IN SUBSIDIARIES AND EQUITY SECURITIES HELD FOR LONG-TERM INVESTMENT 4,924 6,488 5,522 6,644 Of which unlisted securities 1,698 2,930 1,704 2,770 Affi liates 55,266 83,412 51,605 73,122 Of which provisions (1,809) (1,341) TOTAL AFFILIATES 55,266 83,412 51,605 73,122
BNP Paribas SA’s equity investments and affi liates in credit institutions totalled EUR 1,983 million and EUR 24,138 million, respectively, at 31 December 2010, compared with EUR 2,064 million and EUR 26,484 million, respectively, at 31 December 2009.
2010 Registration document and fi nancial report - BNP PARIBAS 311 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Notes to the parent company fi nancial statements
3.d TREASURY SHARES 31 December 2010 31 December 2009 In millions of euros, at Gross value Carrying amount Carrying amount Trading account securities 7 7 6 Securities available for sale 2 0 1 Investments in non-consolidated undertakings 61 61 101 TOTAL TREASURY SHARES 70 68 108
As of 31 December 2010, BNP Paribas SA held 27,817 treasury shares The shares could be acquired for the following purposes: for subsequent classifi ed as “Securities available for sale” and intended to be used for cancellation, to fulfi l the Bank’s obligations relative to the issue of shares share awards to Group employees, granted or sold as part of an employee or share equivalents, for stock option plans, for share awards, or for profi t-sharing scheme, employee share ownership plan, or company granting or selling shares to employees under an employee profi t-sharing savings plan. BNP Paribas SA also held 990,691 treasury shares classifi ed scheme, employee share ownership plan, or corporate savings plan; to as “Affi liates” and intended to be cancelled. be held in treasury shares for subsequent remittance in exchange or payment for external growth transactions, within the scope of a market- Under the Bank’s market-making agreement with Exane BNP Paribas, making agreement compliant with the Code of Ethics recognised by the BNP Paribas SA owned 149,596 treasury shares classifi ed as trading AMF; or for asset and fi nancial management purposes. account securities, at 31 December 2010. This market-making agreement is consistent with the Code of Ethics recognised by the AMF. This authorisation was granted for a period of 18 months. The Fifth Resolution of the Shareholders’ General Meeting of 12 May 2010, which replaced the Fifth Resolution of the Shareholders’ General Meeting of 13 May 2009, authorised BNP Paribas to buy back shares representing up to 10% of the Bank’s issued capital at a maximum purchase price of EUR 75 per share (vs. EUR 68 per share previously).
3.e LONG-TERM INVESTMENTS Gross value Provisions Carrying amount Disposals and Transfers redemp- and other Other 6 In millions of euros 01/01/2010 Purchases tions movements 31/12/2010 01/01/2010 Allocations Reversals movements 31/12/2010 31/12/2010 31/12/2009 Debt securities held to maturity (note 3.c) 9,598 695 (1,774) (414) 8,105 164 24 (47) 3 144 7,960 9,429 Investments in subsidiaries and equity securities held for long- term investment (note 3.c) 5,955 155 (155) 29 5,984 434 694 (73) 5 1,059 4,924 5,522 Affi liates (note 3.c) 52,946 5,014 (975) 90 57,075 1,342 572 (117) 12 1,809 55,266 51,605 Treasury shares (note 3.c) 101 (40) 61 61 101 TOTAL LONG-TERM INVESTMENTS 68,600 5,864 (2,945) (295) 71,225 1,940 1,291 (237) 20 3,012 68,212 66,657
Under CRC Regulation 2008-17 of 10 December 2008, fi nancial instruments initially held for trading can be reclassifi ed as Debt securities held to maturity.
312 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Notes to the parent company fi nancial statements 6
The following table summarises the reclassifi cations made in the fourth quarter of 2008 and the fi rst half of 2009. Amount on the reclassifi cation date 31 December 2010 31 December 2009 1st half Carrying Market or Carrying Market or In millions of euros, at of 2009 4th quarter of 2008 value model value value model value Financial assets reclassifi ed out of the trading portfolio 2,760 4,404 4,232 4,248 5,125 5,138 Debt securities held to maturity 2,760 4,404 4,232 4,248 5,125 5,138
The following table shows the profi t and loss items related to the reclassifi ed assets, both as they were recorded during the period and as they would have been recorded if the reclassifi cation had not taken place. 2010 2009 Actual After Before In millions of euros Actual Pro forma (1) reclassifi cation (2) reclassifi cation (2) Pro forma(1) Profi t and loss items (before tax) 217 240 151 (75) 615 Interest income 224 156 250 183 Gains (losses) on trading book transactions 84 (75) 432 Gains (losses) on disposals of long-term investments (4) 10 Cost of risk (3) (109) (1) Profi t or loss (before tax) from the reclassifi ed assets in 2008 and 2009 if the reclassifi cation had not taken place. (2) Effect on profi t or loss (before tax) from assets reclassifi ed in 2009.
3.f DEBT SECURITIES In millions of euros, at 31 December 2010 31 December 2009 Negotiable debt securities 169,779 149,602 Bond issues 3,405 5,361 6 Other debt securities 762 977 TOTAL DEBT SECURITIES 173,946 155,940 Of which unamortised premiums 776 566
➤ BOND ISSUES
The following table gives the contractual maturity schedule for bonds issued by BNP Paribas SA as of 31 December 2010.
In millions of euros Outstanding at 31/12/2010 2011 2012 2013 2014 2015 2016 to 2020 After 2020 Bond issues 3,405 275 525 610 242 1,014 707 32
2010 Registration document and fi nancial report - BNP PARIBAS 313 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Notes to the parent company fi nancial statements
3.g OTHER ASSETS AND LIABILITIES In millions of euros, at 31 December 2010 31 December 2009 Options purchased 160,925 157,817 Settlement accounts related to securities transactions 3,607 3,650 Deferred tax assets 1,768 1,488 Miscellaneous assets 23,333 19,394 TOTAL OTHER ASSETS 189,633 182,349 Options sold 156,344 156,463 Settlement accounts related to securities transactions 3,431 4,015 Liabilities related to securities transactions 110,847 82,707 Deferred tax liabilities 44 129 Miscellaneous liabilities (1) 24,338 23,982 TOTAL OTHER LIABILITIES 295,004 267,296 (1) BNP Paribas SA’s accounts payable in continental France totalled EUR 22.8 million at 31 December 2010; 93.8% of this liability is less than 60 days old.
3.h ACCRUED INCOME AND EXPENSES In millions of euros, at 31 December 2010 31 December 2009 Remeasurement of currency instruments and derivatives 48,262 53,005 Accrued income 8,866 7,447 Collection accounts 2,764 2,821 Other accrued income 13,300 7,642 TOTAL ACCRUED INCOME 73,190 70,915 Remeasurement of currency instruments and derivatives 46,647 42,261 Accrued expenses 10,785 9,973 6 Collection accounts 748 906 Other accrued expenses 2,599 2,255 TOTAL ACCRUED EXPENSES 60,779 55,395
3.i OPERATING ASSETS 31 December 2010 31 December 2009 Dep., amort. and In millions of euros, at Gross value provisions Carrying amount Carrying amount Software 1,747 (1,227) 520 482 Other intangible assets 5,633 (29) 5,604 4,956 TOTAL INTANGIBLE ASSETS 7,380 (1,256) 6,124 5,438 Land and buildings 2,132 (636) 1,496 1,474 Equipment, furniture, and fi xtures 1,966 (1,513) 453 506 Other property, plant, and equipment 236 236 220 TOTAL TANGIBLE ASSETS 4,334 (2,148) 2,185 2,200
314 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Notes to the parent company fi nancial statements 6
3.j PROVISIONS Other In millions of euros, at 31 December 2009 Allocations Reversals movements 31 December 2010 Provision for employee benefi t obligations 483 232 (173) 24 566 Provision for doubtful loans (note 2.d) 167 3 (40) 14 144 Provision for off-balance sheet commitments (note 2.d) 578 191 (77) 28 720 Other provisions
■ for banking transactions 832 291 (382) 10 751
■ for non-banking transactions 831 147 (128) 41 890 TOTAL PROVISIONS 2,891 863 (800) 117 3,070
➤ PROVISIONS FOR RISKS ON REGULATED SAVINGS PRODUCTS
In millions of euros, at 31 December 2010 31 December 2009 Deposits collected under home savings accounts and plans 14,171 14,003 Of which for home savings plans 11,400 11,176 Aged more than 10 years 3,764 3,385 Aged between 4 to 10 years 5,752 5,221 Aged less than 4 years 1,884 2,570 Outstanding loans granted under home savings accounts and plans 515 587 Of which loans granted under home savings plans 126 159 Provisions for home savings accounts and plans 226 201 Of which for home savings plans 203 165 Aged more than 10 years 67 61 Aged between 4 to 10 years 102 59 Aged less than 4 years 34 45 6
➤ CHANGE IN PROVISIONS FOR REGULATED SAVINGS PRODUCTS
2010 Provisions Provisions In millions of euros for home savings plans for home savings accounts Total provisions at start of period 165 36 Additions to provisions during the period 37 Provision reversals during the period (12) Total provisions at end of the period 203 23
2010 Registration document and fi nancial report - BNP PARIBAS 315 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Notes to the parent company fi nancial statements
3.k SUBORDINATED DEBT In millions of euros, at 31 December 2010 31 December 2009 Redeemable subordinated debt 11,079 14,009 Undated subordinated debt 9,925 9,985 Undated Super Subordinated Notes 7,750 7,479 Undated Floating-Rate Subordinated Notes 1,947 2,282 Undated Participating Subordinated Notes 228 224 Related debt 79 395 TOTAL SUBORDINATED DEBT 21,083 24,389
Redeemable subordinated debt Debt issued by BNP Paribas SA via placements in the international markets may be subject to early redemption of the capital and early The redeemable subordinated debt issued by the Group is in the form payment of interest due at maturity at the issuer’s discretion on or after of medium and long-term debt securities, equivalent to ordinary a date stipulated in the issue particulars (call option), or in the event subordinated debt; these issues are redeemable prior to the contractual that changes in the applicable tax rules oblige the BNP Paribas Group maturity date in the event of liquidation of the issuer, and rank after the issuer to compensate debt-holders for the consequences of such changes. other creditors but before holders of participating loans and participating Redemption may be subject to a notice period of between 15 and 60 subordinated notes. days, and is in all cases subject to approval by the banking supervisory These debt issues may contain a call provision authorising the Group to authorities. redeem the securities prior to maturity by repurchasing them in the stock market, via a public tender or exchange offers, or (in the case of private placements) over the counter, subject to regulatory approval.
The following table gives the maturity schedule for redeemable subordinated debt as of 31 December 2010. Outstandings 2016 After In millions of euros at 31/12/2010 2011 2012 2013 2014 2015 to 2020 2020 Redeemable subordinated debt 11,079 304 1,856 670 363 771 6,071 1,044
Undated subordinated debt BNP Paribas SA redeemed the EUR 2,550 million issue of Undated Super 6 Subordinated Notes purchased in December 2008 by Société de Prise de Undated Super Subordinated Notes Participation de l’État (a French state shareholding company) using the Between 2005 and 2009, BNP Paribas SA carried out nineteen issues of proceeds from the issue of BNP Paribas non-voting shares in March 2009. Undated Super Subordinated Notes representing a total amount of EUR In December 2007 Fortis Banque France, which was merged into 7,750 million. These notes pay a fi xed rate coupon and are redeemable BNP Paribas SA on 12 May 2010, issued EUR 60 million of Undated Super at the end of a fi xed period and at each coupon date afterwards. Some Subordinated Notes. These notes pay a fl oating-rate coupon and are of these notes will pay a coupon indexed to Euribor or Libor if they are redeemable after ten years and at each coupon date afterwards. not redeemed at the end of this period.
316 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Notes to the parent company fi nancial statements 6
The table below sets out the characteristics of the issues of Undated Super Subordinated Notes. Original amount in issue Issuer Issue date Currency currency Term Interest rate 31 December 2010 31 December 2009 BNP Paribas SA June 2005 USD 1,350 10 years USD 3-month Libor + 1.68% 1,010 943 BNP Paribas SA October 2005 EUR 1,000 6 years 4.875% 1,000 1,000 BNP Paribas SA October 2005 USD 400 6 years 6.25% 299 279 BNP Paribas SA April 2006 EUR 750 10 years 3-month Euribor + 1.69% 750 750 BNP Paribas SA April 2006 GBP 450 10 years GBP 3-month Libor + 1.13% 525 508 BNP Paribas SA July 2006 EUR 150 20 years 3-month Euribor + 1.92% 150 150 BNP Paribas SA July 2006 GBP 325 10 years GBP 3-month Libor + 1.81% 379 367 BNP Paribas SA April 2007 EUR 750 10 years 3-month Euribor + 1.72% 750 750 BNP Paribas SA June 2007 USD 600 5 years 6.50% 449 419 BNP Paribas SA June 2007 USD 1,100 30 years USD 3-month Libor + 1.29% 823 768 BNP Paribas SA October 2007 GBP 200 10 years GBP 3-month Libor + 1.85% 233 226 BNP Paribas SA December 2007 EUR 60 (1) 10 years 3-month Euribor + 3.880% 60 BNP Paribas SA June 2008 EUR 500 10 years 3-month Euribor + 3.750% 500 500 BNP Paribas SA September 2008 EUR 650 5 years 3-month Euribor + 4.050% 650 650 BNP Paribas SA September 2008 EUR 100 10 years 3-month Euribor + 3.925% 100 100 BNP Paribas SA December 2009 EUR 2 10 years 3-month Euribor + 4.75% 2 2 BNP Paribas SA December 2009 EUR 17 10 years 3-month Euribor + 4.75% 17 17 BNP Paribas SA December 2009 USD 70 10 years USD 3-month Libor + 4.75% 52 49 BNP Paribas SA December 2009 USD 0.5 10 years USD 3-month Libor + 4.75% 1 1 TOTAL UNDATED SUPER SUBORDINATED NOTES 7,750 7,479 (1) Through the absorption of Fortis Banque France on 12 May 2010.
BNP Paribas has the option of not paying interest due on these Undated capital increase or any other equivalent measure - the nominal value 6 Super Subordinated Notes if no dividends were paid on BNP Paribas SA of the notes may be reduced in order to serve as a new basis for the ordinary shares Undated Super Subordinated Notes shares in the previous calculation of the related coupons until the capital defi ciency is made up year. Unpaid interest is not carried forward. and the nominal value of the notes is increased to its original amount. However, in the event of the liquidation of BNP Paribas, the amount due The contracts relating to these Undated Super Subordinated Notes to the holders of these notes will represent their original nominal value contain a loss absorption clause. Under the terms of this clause, in the irrespective of whether or not their nominal value has been reduced. event of insuffi cient regulatory capital - which is not fully offset by a
2010 Registration document and fi nancial report - BNP PARIBAS 317 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Notes to the parent company fi nancial statements
Undated Floating-Rate Subordinated Notes The Undated Floating-Rate Subordinated Notes (TSDIs) and other Undated Subordinated Notes issued by BNP Paribas are redeemable on liquidation of the Bank after repayment of all other debts but ahead of Undated Participating Subordinated Notes. They confer no rights over residual assets. The following table summarises the TSDIs issued to date. Original amount in issue currency Issuer Issue date Currency (in millions) Interest rate 31 December 2010 31 December 2009 BNP SA October 1985 EUR 305 TMO - 0.25% 254 254 BNP SA September 1986 USD 500 6-month Libor + 0.75% 205 191 BNP Paribas SA October 2000 USD 500 9.003% then 3-month Libor + 3.26% 349 BNP Paribas SA October 2001 EUR 500 6.625% then 3-month Euribor + 2.6% 500 500 BNP Paribas SA January 2002 EUR 660 6.342% then 3-month Euribor + 2.33% 660 660 BNP Paribas SA January 2003 EUR 328 5.868% then 3-month Euribor + 2.48% 328 328 TOTAL UNDATED FLOATING-RATE SUBORDINATED NOTES (TSDIs) 1,947 2,282
Payment of interest is obligatory on the TSDIs issued in October 1985 Undated participating subordinated notes (representing a nominal amount of EUR 305 million), but the Board of The undated participating subordinated notes issued by the Bank between Directors may postpone interest payments if the Ordinary Shareholders’ 1984 and 1988 for a total amount of EUR 337 million, are redeemable Meeting notes that there is no income available for distribution within only in the event of liquidation of the Bank, but may be retired under the the twelve months preceding the interest payment date. terms specifi ed in the French law of 3 January 1983. Under this option, The other TSDIs contain a specifi c call option provision, whereby they 434,267 notes of the 2,212,761 notes originally issued were retired and may be redeemed at par prior to maturity at the issuer’s discretion at any subsequently cancelled between 2004 and 2007. Payment of interest is time after a date specifi ed in the issue particulars, after approval of the obligatory, but the Board of Directors may postpone interest payments banking regulators. They are not subject to any interest step-up clause. if the Ordinary General Meeting of shareholders held to approve Payment of interest is obligatory, but the Board of Directors may postpone the fi nancial statements notes that there is no income available for interest payments if the Ordinary Shareholders’ General Meeting decides distribution. not to pay a dividend within the twelve months preceding the interest In December 2009, these notes were sold or swapped for Undated Super payment date. Subordinated Notes through a public offer. This transaction gave rise to a net gain of EUR 7 million based on the book value of the Undated 6 Participating Subordinated Notes sold or swapped.
318 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Notes to the parent company fi nancial statements 6
Note 4 FINANCING AND GUARANTEE COMMITMENTS
4.a FINANCING COMMITMENTS In millions of euros, at 31 December 2010 31 December 2009 Credit institutions 53,701 56,962 Customers 156,559 125,175 Confi rmed letters of credit 87,209 86,920 Other commitments given to customers 69,350 38,255 TOTAL FINANCING COMMITMENTS GIVEN 210,259 182,137 Credit institutions 81,886 81,004 Customers 23,380 6,550 TOTAL FINANCING COMMITMENTS RECEIVED 105,266 87,554
4.b GUARANTEE COMMITMENTS In millions of euros, at 31 December 2010 31 December 2009 Credit institutions 37,207 30,225 Customers 104,725 92,707 TOTAL GUARANTEE COMMITMENTS GIVEN 141,933 122,932 Credit institutions 61,901 52,128 Customers 123,540 94,216 TOTAL GUARANTEE COMMITMENTS RECEIVED 185,441 146,344
4.c FINANCIAL INSTRUMENTS GIVEN AND RECEIVED AS GUARANTEES 6 ➤ FINANCIAL INSTRUMENTS GIVEN AS COLLATERAL
In millions of euros, at 31 December 2010 31 December 2009 Financial instruments (negotiable securities and private receivables) deposited with central banks and eligible for use at any time as collateral for refi nancing transactions 74,301 76,285
■ Used as collateral with central banks 15,623 34,917
■ Available for refi nancing transactions 58,678 41,368 Other fi nancial assets pledged as collateral for transactions with banks and financial customers 65,483 51,659
As of 31 December 2010, the Bank had EUR 74,301 million of fi nancial of the amount deposited with central banks (vs. EUR 34,917 million at instruments (negotiable securities and private receivables) deposited 31 December 2009), including EUR 7,000 million of the amount deposited or pledged with central banks for use at any time as collateral for with Banque de France (vs. EUR 27,117 million at 31 December 2009). refi nancing transactions (vs. EUR 76,285 million at 31 December 2009). The other assets that the Bank has pledged as collateral with credit This amount includes EUR 50,154 million deposited with Banque de institutions and fi nancial customers totalled EUR 45,916 million at France (vs. EUR 51,604 million at 31 December 2009) under Banque 31 December 2010 (vs. EUR 39,974 million at 31 December 2009), and de France’s comprehensive collateral management system to cover include fi nancing for BNPP HL Covered Bonds,Société de Financement de Eurosystem monetary policy transactions and intraday loans. As of l’Économie Française, and Caisse de Refi nancement de l’Habitat. 31 December 2010 the Bank had used as collateral EUR 15,623 million
➤ FINANCIAL INSTRUMENTS RECEIVED AS COLLATERAL
In millions of euros, at 31 December 2010 31 December 2009 Financial instruments received as collateral 27,025 12,984
2010 Registration document and fi nancial report - BNP PARIBAS 319 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Notes to the parent company fi nancial statements
Note 5 SALARIES AND EMPLOYEE BENEFITS
5.a SALARIES AND EMPLOYEE BENEFIT EXPENSES In millions of euros 2010 2009 Salaries (3,788) (3,625) Tax and social security charges (1,479) (1,736) Employee profi t-sharing and incentive schemes (250) (190) TOTAL SALARIES AND EMPLOYEE BENEFIT EXPENSES (5,517) (5,551)
The following table gives the breakdown of BNP Paribas SA employees.
Headcount, at 31 December 2010 31 December 2009 Employees in Metropolitan France 39,523 37,946 Of which managers 21,319 19,653 Employees outside Metropolitan France 10,148 8,855 TOTAL BNP PARIBAS SA EMPLOYEES 49,671 46,801
5.b EMPLOYEE BENEFIT OBLIGATIONS Post-employment benefits under defined-benefit plans Post-employment benefits under The legacy defi ned-benefi t plans in France and other countries are valued defined-contribution plans independently using actuarial techniques, applying the projected unit cost In France, BNP Paribas Group pays contributions to various nationwide method, in order to determine the expense arising from rights vested in basic and top-up pension schemes. BNP Paribas SA has set up a funded employees and benefi ts payable to retired employees. The demographic pension plan under a company-wide agreement. Under this plan, and fi nancial assumptions used to estimate the present value of these employees will receive an annuity upon retirement, in addition to the obligations and of plan assets take into account economic conditions pension paid by nationwide schemes. specifi c to each country and Group company. Actuarial gains and losses outside the permitted 10% corridor are amortised; these gains and losses In the rest of the world, defi ned-benefi t plans have been closed to are calculated separately for each defi ned-benefi t plan. new employees in most of the countries in which the Group operates 6 (primarily the United States, Germany, Luxembourg, the United Kingdom, Provisions set up to cover obligations under defined-benefit post- Ireland, Norway and Australia). These employees are now offered employment plans totalled EUR 319 million at 31 December 2010 defi ned-contribution plans. Under these plans, the Group’s obligation (against EUR 268 million at 31 December 2009), comprised of EUR 255 is essentially limited to paying a percentage of the employee’s annual million for French plans and EUR 64 million for other plans. salary into the plan. The surplus value of the Bank’s obligations under the corresponding The amount paid into defi ned-contribution post-employment plans in retirement plans totalled EUR 35 million at 31 December 2010, up from France and other countries for the year to 31 December 2010 was EUR EUR 5 million at 31 December 2009. 232 million, vs. EUR 211 million for the year to 31 December 2009.
320 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Notes to the parent company fi nancial statements 6
Pension plans and other post-employment Post-employment healthcare plans benefits In France, BNP Paribas no longer has any obligations in relation to Pension plans healthcare benefi ts for its retired employees. In France, BNP Paribas pays a supplemental banking industry pension Several healthcare benefi t plans for retired employees exist in other arising from rights acquired until 31 December 1993 by former employees countries, mainly in the United States. Provisions for obligations under in retirement at that date and active employees in service at that these plans amounted to EUR 9 million as of 31 December 2010, date. The residual pension obligations are covered by a provision in compared to EUR 6 million as of 31 December 2009. the consolidated fi nancial statements or transferred to an insurance Obligations under post-employment healthcare benefit plans are company outside the Group. measured using the mortality tables applicable in each country. They The defined-benefit plans previously granted to Group executives also build in assumptions about healthcare benefi t costs, including formerly employed by BNP Paribas or Compagnie Bancaire have all been forecast trends in the cost of healthcare services and in infl ation, which closed and converted into top-up type schemes. The amounts allocated to are derived from historical data. the benefi ciaries, subject to their still being with the Group at retirement, were fi xed when the previous schemes were closed. These pension plans Termination benefits have been contracted out to insurance companies. The fair value of the related plan assets in these companies’ balance sheets consists of 82% In France, BNP Paribas is encouraging voluntary redundancy among bonds, 9% equities, and 9% property assets. employees who meet certain eligibility criteria. The obligations to eligible active employees under such plans are provided for when the plan is the In other countries, pension plans are based either on pensions linked to subject of an agreement or a draft bilateral agreement. Plans currently in the employee’s fi nal salary and length of service (United Kingdom), or effect in France concern BNP Paribas employees in metropolitan France. on annual vesting of rights to a capital sum expressed as a percentage of annual salary and paying interest at a pre-defi ned rate (United States). BNP Paribas SA’s provisions for voluntary redundancy and early Some plans are managed by independent fund managers (United retirement plans amounted to EUR 5 million as of 31 December 2010, Kingdom). As of 31 December 2010, 84% of the gross obligations under unchanged from a year earlier. these plans concerned six plans in the United Kingdom and the United States. The fair value of the related plan assets was split as follows: 38% equities, 53% bonds, and 9% other fi nancial instruments.
Other post-employment benefits Group employees also receive various other contractual post-employment benefi ts such as bonuses payable on retirement. BNP Paribas’ obligations for these bonuses in France are funded through a contract taken out with a third-party insurer. 6
2010 Registration document and fi nancial report - BNP PARIBAS 321 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Notes to the parent company fi nancial statements
Note 6 ADDITIONAL INFORMATION
6.a CHANGES IN SHARE CAPITAL AND EARNINGS PER SHARE
Resolutions of the Shareholders’ General Meeting valid for 2010 The following authorisations to increase or reduce the share capital have been granted to the Board of Directors under resolutions voted in Shareholders’ General Meetings and were valid during 2010:
Use of authorisation in Resolutions adopted at Shareholders’ General Meetings 2010 Shareholders’ General Meeting Authorisation to award shares for no consideration to employees and 998,015 free shares of 21 May 2008 corporate offi cers of BNP Paribas and related companies awarded at the Board (21st resolution) The shares awarded may be existing shares or new shares to be issued and meeting of 5 March 2010 may not exceed 1.5% of BNP Paribas’ share capital, i.e. less than 0.5% a year. This authorisation was granted for a period of 38 months.
Shareholders’ General Meeting Authorisation to grant stock subscription or purchase options to corporate 2,423,700 stock of 21 May 2008 offi cers and certain employees subscription options (22nd resolution) The number of options granted may not exceed 3% of BNP Paribas’ share granted at the Board capital, i.e. less than 1% a year. This is a blanket limit covering both the 21st meeting of 5 March 2010 and 22nd resolutions of the Shareholders’ General Meeting of 21 May 2008. This authorisation was granted for a period of 38 months.
Shareholders’ General Meeting Authorisation given to the Board of Directors to set up an ordinary share Excluding the market- of 13 May 2009 buyback programme for the Company until it holds at most 10% of the share making agreement (5th resolution) capital 800,000 shares with a These acquisitions may be used for several purposes, notably: par value of EUR 2 were ■ the award or sale of shares to employees in connection with the employee purchased in March 2010. profi t-sharing scheme, employee share ownership plans or corporate savings Under the market-making plans, stock option programmes and the award of free shares to members agreement, of staff; 1,809,576 shares with a par value of EUR 2 were ■ the cancellation of shares following authorisation by the Shareholders’ General acquired and 1,806,987 6 Meeting (15th resolution of the Shareholders’ General Meeting of 13 May 2009); shares with a par value ■ remittance in exchange or payment for external growth transactions; of EUR 2 were sold during 2010. ■ implementation of a liquidity agreement. This authorisation was granted for a period of 18 months and was nullifi ed by the 5th resolution of the Shareholders’ General Meeting of 12 May 2010.
Shareholders’ General Authorisation to reduce the share capital by cancelling shares. 600,000 shares with a Meeting of 13 May 2009 Authorisation was given to cancel on one or more occasions through a par value of EUR 2 were (15th resolution) reduction in the share capital all or some of the shares that BNP Paribas cancelled on 30 March holds and that it may come to hold, provided that the number of shares 2010 cancelled in any 24-month period does not exceed 10% of the total number of shares at the operation date. Full powers were delegated to complete the capital reduction and deduct the difference between the purchase cost of the cancelled shares and their par value from additional paid-in capital and reserves available for distribution, including from the legal reserve in respect of up to 10% of the capital cancelled. This authorisation was granted for a period of 18 months and was nullifi ed by the 20th resolution of the Shareholders’ General Meeting of 12 May 2010.
322 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Notes to the parent company fi nancial statements 6
Use of authorisation in Resolutions adopted at Shareholders’ General Meetings 2010 Shareholders’ General Resolution to propose a dividend payable in cash or in new shares. 9,160,218 new shares Meeting of 12 May 2010 Payment of the dividend in new shares had the effect of increasing the share with a par value of EUR 2 (3rd resolution) capital by EUR 18,320,436, or 9,160,218 shares, generating additional paid-in were issued on 15 June capital of EUR 401,858,763.66 2010
Shareholders’ General Authorisation given to the Board of Directors to set up an ordinary share This authorisation was not Meeting of 12 May 2010 buyback programme for the Company until it holds at most 10% of the share used during the period. (5th resolution) capital. These acquisitions may be used for several purposes, notably: ■ the award or sale of shares to employees in connection with the employee profi t-sharing scheme, employee share ownership plans or corporate savings plans, stock option programmes and the award of free shares to members of staff; the cancellation of shares following authorisation by the Shareholders’ General Meeting (20th resolution of the Shareholders’ General Meeting of 12 May 2010); ■ remittance in exchange or payment for external growth transactions; ■ implementation of a liquidity agreement. This authorisation was granted for a period of 18 months and supersedes that given by the 5th resolution of the Shareholders’ General Meeting of 13 May 2009.
Shareholders’ General Authorisation to issue ordinary shares and share equivalents with pre- This authorisation was not Meeting of 12 May 2010 emptive rights for existing shareholders maintained. used during the period (12th resolution) The par value of the capital increases that may be carried out immediately and/or in the future by virtue of this authorisation may not exceed EUR 1 billion (representing 500 million shares). The par value of any debt instruments giving access to the capital of BNP Paribas that may be issued by virtue of this authorisation may not exceed EUR 10 billion. This authorisation was granted for a period of 26 months and supersedes that given by the 13th resolution of the Shareholders’ General Meeting of 21 May 2008. 6
Shareholders’ General Authorisation to issue ordinary shares and share equivalents, with pre- This authorisation was not Meeting of 12 May 2010 emptive rights for existing shareholders waived, and a priority subscription used during the period (13th resolution) period granted. The par value of the capital increases that may be carried out immediately and/or in the future by virtue of this authorisation may not exceed EUR 350 million (representing 175 million shares). The par value of any debt instruments giving access to the capital of BNP Paribas that may be issued by virtue of this authorisation may not exceed EUR 7 billion. This authorisation was granted for a period of 26 months and supersedes that given by the 14th resolution of the Shareholders’ General Meeting of 21 May 2008.
2010 Registration document and fi nancial report - BNP PARIBAS 323 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Notes to the parent company fi nancial statements
Use of authorisation in Resolutions adopted at Shareholders’ General Meetings 2010 Shareholders’ General Authorisation to issue ordinary shares and share equivalents, with pre- This authorisation was not Meeting of 12 May 2010 emptive rights for existing shareholders waived, in consideration for used during the period (14th resolution) securities tendered to public exchange offer. The par value of the capital increases that may be carried out on one or more occasions by virtue of this authorisation may not exceed EUR 350 million. This authorisation was granted for a period of 26 months and supersedes that given by the 15th resolution of the Shareholders’ General Meeting of 21 May 2008.
Shareholders’ General Authorisation to issue ordinary shares and share equivalents, with pre- This authorisation was not Meeting of 12 May 2010 emptive rights for existing shareholders waived, in consideration for used during the period (15th resolution) securities tendered to contributions of unlisted shares (up to a maximum of 10% of the capital) The par value of the capital increases that may be carried out on one or more occasions by virtue of this authorisation may not exceed 10% of the number of shares comprising the issued capital of BNP Paribas. This authorisation was granted for a period of 26 months and supersedes that given by the 13th resolution of the Shareholders’ General Meeting of 13 May 2009.
Shareholders’ General Blanket limit on authorisations to issue shares with pre-emptive rights for Not applicable Meeting of 12 May 2010 existing shareholders waived. (16th resolution) The maximum par value of all issues made with pre-emptive rights for existing shareholders waived by virtue of the authorisations granted under the 13th to 15th resolutions of the Shareholders’ General Meeting of 12 May 2010 may not exceed EUR 350 million for shares immediately and/or in the future and EUR 7 billion for debt instruments.
Shareholders’ General Issue of shares to be paid up by capitalising income, retained earnings or This authorisation was not Meeting of 12 May 2010 additional paid-in capital. used during the period (17th resolution) Authorisation was given to increase the issued capital within the limit of a maximum par value of EUR 1 billion on one or more occasions, by capitalising all or part of the retained earnings, profi ts or additional paid-in capital, successively or simultaneously, through the issuance and award of free ordinary shares, through an increase in the par value of existing shares, 6 or through a combination of these two methods. This authorisation was granted for a period of 26 months and supersedes that given by the 4th resolution of the Extraordinary Shareholders’ Meeting of 27 March 2009.
Shareholders’ General Blanket limit on authorisations to issue shares with or without pre-emptive Not applicable Meeting of 12 May 2010 rights for existing shareholders. (18th resolution) The maximum par value of all issues made with or without pre-emptive rights for existing shareholders by virtue of the authorisations granted under the 12th to 15th resolutions of the Shareholders’ General Meeting of 12 May 2010 may not exceed EUR 1 billion for shares immediately and/or in the future and EUR 10 billion for debt instruments.
324 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Notes to the parent company fi nancial statements 6
Use of authorisation in Resolutions adopted at Shareholders’ General Meetings 2010 Shareholders’ General Authorisation granted to the Board of Directors to carry out transactions Issue of 3,700,076 new Meeting of 12 May 2010 reserved for members of the BNP Paribas Group’s Corporate Savings Plan in ordinary shares with a par (19th resolution) the form of new share issues and/or sales of reserved shares. value of EUR 2 recorded Authorisation was given to increase the share capital within the limit of a on 16 July 2010 maximum par value of EUR 46 million on one or more occasions by issuing ordinary shares, with pre-emptive rights for existing shareholders waived, reserved for members of the BNP Paribas Group’s Corporate Savings Plan. The transactions authorised by this resolution may also take the form of sales of shares to members of the BNP Paribas Group’s Corporate Savings Plan. This authorisation was granted for a period of 26 months and supersedes that given by the 3rd resolution of the Extraordinary Shareholders’ Meeting of 27 March 2009.
Shareholders’ General Authorisation to reduce the share capital by cancelling shares. This authorisation was not Meeting of 12 May 2010 Authorisation was given to cancel on one or more occasions through a used during the period (20th resolution) reduction in the share capital all or some of the shares that BNP Paribas holds and that it may come to hold, provided that the number of shares cancelled in any 24-month period does not exceed 10% of the total number of shares in issue on the transaction date. Full powers were delegated to complete the capital reduction and deduct the difference between the purchase cost of the cancelled shares and their par value from additional paid-in capital and reserves available for distribution, including from the legal reserve in respect of up to 10% of the capital cancelled. This authorisation was granted for a period of 18 months and supersedes that given by the 15th resolution of the Shareholders’ General Meeting of 13 May 2009.
Shareholders’ General Approval of the merger-absorption of Fortis Banque France by BNP Paribas 354 new shares with a par Meeting of 12 May 2010 and corresponding increase in the share capital. value of EUR 2 (21st resolution) Issue of 354 new ordinary shares with a par value of EUR 2 pursuant to the on 12 May 2010 merger-absorption of Fortis Banque France duly placed on record on 12 May 2010.
Capital increases linked to the acquisition of Fortis ■ 11,717,549 ordinary BNP Paribas shares each with a par value of 6 Bank SA/NV and BGL SA EUR 2 for the Third Contribution, which consists in the transfer by the Luxembourg government of 4,540,798 BGL SA shares, representing BNP Paribas signed an agreement with the Belgian government and around 16.57% of the latter’s share capital and voting rights. The Luxembourg government related to the acquisition by BNP Paribas of Shareholders’ General Meeting on 13 May 2009 approved this Third certain Fortis group companies from the Belgian government acting via Contribution, formally recorded its defi nitive completion and that the SFPI and the Luxembourg government (hereinafter the “transaction”). of the corresponding issue of shares under its 12th resolution. The The transaction comprised four asset contributions, with an issue of Luxembourg government undertook to hold the 5,858,774 shares shares carried out in consideration for each one: received in consideration for its asset contribution until 23 October 2009; ■ 88,235,294 ordinary BNP Paribas shares each with a par value of EUR 2 for the First Contribution, which consisted in the transfer by SFPI of ■ 500,000 ordinary BNP Paribas shares each with a par value of 263,586,083 Fortis Bank SA/NV shares, representing around 54.55% EUR 2 for the Fourth Contribution, consisting of in the transfer by of the latter’s share capital and voting rights. The Board of Directors the Luxembourg government of 193,760 BGL SA shares, representing approved the First Contribution on 12 May 2009 using the authorisation around 0.69% of the latter’s share capital and voting rights. The Board granted under the 16th resolution passed at the Shareholders’ General of Directors approved this Fourth Contribution, formally recorded its Meeting of 21 May 2008. The shares issued in consideration for this defi nitive completion and that of the corresponding issue of shares on contribution were covered by a lock-up commitment that runs until 13 May 2009, using the authorisation granted to it by the Shareholders’ 10 October 2010; General Meeting of 13 May 2009 under its 13th resolution. The Grand Duchy of Luxembourg undertook to hold the 250,000 shares received ■ 32,982,760 ordinary BNP Paribas shares each with a par value of in consideration for its asset contribution until 23 October 2009. EUR 2 for the Second Contribution, which consists in the transfer by SFPI of 98,529,695 additional Fortis Bank SA/NV shares, representing As a result of these four asset contributions, BNP Paribas’ share capital around 20.39% of the latter’s share capital and voting rights. The increased by 133,435,603 ordinary shares, each with a par value of EUR 2. Shareholders’ General Meeting on 13 May 2009 approved this Second Contribution, formally recorded its defi nitive completion and that of the corresponding issue of shares under its 11th resolution;
2010 Registration document and fi nancial report - BNP PARIBAS 325 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Notes to the parent company fi nancial statements
Date of authorisation by Number of Par value Shareholders’ Date of decision by Operations affecting share capital shares (in euros) Meeting Board of Directors
NUMBER OF SHARES OUTSTANDING AT 31 DECEMBER 2008 912,096,107 2 Increase in share capital by exercise of stock subscription options 74,024 2 (1) (1) Increase in share capital by exercise of stock subscription options 1,824,582 2 (1) (1) Capital increase arising on the acquisition of Fortis 133,435,603 2 (2) (2) Capital increase arising on the issuance of non-voting shares 187,224,669 2 27 March 2009 27 March 2009 Capital increase reserved for members of the Company Savings Plan 9,000,000 2 27 March 2009 05 May 2009 Capital increase arising on the payment of a stock dividend 21,420,254 2 13 May 2009 13 May 2009 Capital decrease (219,294) 2 13 May 2009 03 August 2009 Capital increase 107,650,488 2 21 May 2008 25 September 2009 Capital decrease arising on the cancellation of non-voting shares (187,224,669) 2 04 November 2009 NUMBER OF SHARES OUTSTANDING AT 31 DECEMBER 2009 1,185,281,764 2 Increase in share capital by exercise of stock subscription options 595,215 2 (1) (1) Increase in share capital by exercise of stock subscription options 522,529 2 (1) (1) Capital decrease (600,000) 2 13 May 2009 05 March 2010 Capital increase arising on the merger of Fortis Bank France 354 2 12 May 2010 12 May 2010 Capital increase arising on the payment of a stock dividend 9,160,218 2 12 May 2010 12 May 2010 Capital increase reserved for members of the Company Savings Plan 3,700,076 2 12 May 2010 12 May 2010 NUMBER OF SHARES OUTSTANDING AT 31 DECEMBER 2010 1,198,660,156 2 (1) Various resolutions voted in the Shareholders’ General Meetings and decisions of the Board of Directors authorising the granting of stock subscription options that were exercised during the period. (2) Various resolutions adopted by the Shareholders’ General Meeting and decisions made by the Board of Directors authorising the issues of shares related to the acquisition of Fortis. 6
326 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Notes to the parent company fi nancial statements 6
6.b STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FROM 31 DECEMBER 2008 TO 31 DECEMBER 2010 Retained earnings and Additional paid-in net income Total shareholders’ In millions of euros Share capital capital for the period equity SHAREHOLDERS’ EQUITY AT 31 DECEMBER 2008 1,824 8,819 23,858 34,501 Dividend payout for 2008 (1,044) (1,044) Capital increases 547 12,528 50 13,125 Capital reductions (by cancellation of shares) (16) (16) Other changes (30) (30) Net income for 2009 4,009 4,009 SHAREHOLDERS’ EQUITY AT 31 DECEMBER 2009 2,371 21,331 26,843 50,545 Dividend payout for 2009 18 402 (1,776) (1,356) Capital increases 9 191 3 203 Capital reductions (by cancellation of shares) (1) (39) (40) Other changes (35) (12) (47) Net income for 2010 3,465 3,465 SHAREHOLDERS’ EQUITY AT 31 DECEMBER 2010 2,397 21,850 28,523 52,770
6.c NOTIONAL AMOUNTS OF FORWARD FINANCIAL INSTRUMENTS The notional amounts of derivative instruments are merely an indication of the volume of BNP Paribas SA’s activities in fi nancial instruments markets, and do not refl ect the market risks associated with such instruments.
Trading portfolio
In millions of euros, at 31 December 2010 31 December 2009 Currency derivatives 1,973,422 1,610,990 6 Interest rate derivatives 37,120,905 35,304,751 Equity derivatives 1,825,489 1,655,137 Credit derivatives 2,384,781 1,606,945 Commodity derivatives 88,124 111,590 Other derivatives 33 TOTAL FORWARD FINANCIAL INSTRUMENTS IN THE TRADING PORTFOLIO 43,392,724 40,289,416
Financial instruments traded on organised markets accounted for 44% Market value of the Bank’s derivatives transactions at 31 December 2010 (vs. 41% at 31 December 2009). The market value of the Bank’s net position on fi rm transactions was approximately EUR 1,500 million as of 31 December 2010, compared with EUR 4,800 million as of 31 December 2009. The market value of Hedging strategy the Bank’s net long position on options was approximately EUR 3,100 The total notional amount of derivatives used for hedging purposes stood million as of 31 December 2010, compared with EUR 850 million as of at EUR 502,412 million as of 31 December 2010, compared with EUR 31 December 2009. 401,940 million as of 31 December 2009. Derivatives used for hedging purposes are primarily contracted on over- the-counter markets.
2010 Registration document and fi nancial report - BNP PARIBAS 327 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Notes to the parent company fi nancial statements
6.d SEGMENT INFORMATION The following table gives a regional breakdown of BNP Paribas SA’s interbank transactions and customer items recognised on the balance sheet. Interbank transactions Customer and leasing transactions Total by region In millions of euros, at 31 December 2010 31 December 2009 31 December 2010 31 December 2009 31 December 2010 31 December 2009 France 336,431 334,972 239,552 206,996 575,984 541,968 Other countries in the European Economic Area 99,431 96,731 63,275 52,685 162,706 149,416 Countries in the Americas and Asia 57,948 65,105 58,415 45,328 116,364 110,433 Other countries 2,575 2,099 4,625 5,270 7,199 7,369 TOTAL USES OF FUNDS 496,385 498,907 365,867 310,279 862,252 809,186 France 254,311 274,765 179,210 158,639 433,522 433,404 Other countries in the European Economic Area 49,714 62,352 94,024 78,611 143,738 140,963 Countries in the Americas and Asia 56,805 47,924 46,870 49,620 103,676 97,544 Other countries 6,316 5,157 4,273 3,729 10,589 8,886 TOTAL SOURCES OF FUNDS 367,146 390,198 324,378 290,599 691,524 680,797
86% of BNP Paribas SA’s revenues in 2010 came from counterparties in the European Economic Area, compared with 88% in 2009.
6.e SCHEDULE OF SOURCES AND USES OF FUNDS Term remaining Demand and overnight Up to 3 3 months More than In millions of euros transactions months to 1 year 1 to 5 years 5 years Provisions Total 6 Uses of funds Cash and amounts due from central banks and post offi ce banks 23,453 23,453 Treasury bills and money-market instruments 37,373 23,524 29,709 47,041 (1,414) 136,232 Due from credit institutions 32,735 188,659 33,512 53,517 28,930 (653) 336,700 Customer and leasing transactions 19,758 139,800 33,160 101,969 78,058 (6,879) 365,867 Bonds and other fi xed-income securities 23,436 15,088 25,196 33,213 (1,116) 95,816 Sources of funds Amounts due to credit institutions, central banks, and post offi ce banks 59,228 231,163 25,749 38,780 12,226 367,146 Customer items 118,453 147,597 23,880 30,267 4,180 324,378 Debt securities other than bonds and other debt securities (note 3.f) 139,716 24,362 4,790 919 169,788
328 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Appropriation of income and dividend distribution for the year ended 31 December 2010 6
6.f UNCOOPERATIVE STATES AND General Tax Code. In accordance with BNP Paribas’ “best interests” TERRITORIES principle, and to ensure that the Group’s internal control mechanisms are applied consistently, these sites are subject to the Group’s regulations Authorisation from the Group’s Compliance Department must be obtained on risk management, money laundering, corruption, fi nancial embargoes, through a special procedure before the Group can set up a site in a state and terrorism fi nancing. considered “uncooperative” as defi ned by Article 238-O A of the French
Ownership Company name interest (%) Legal form Type of license Business activity Brunei BNP Paribas Asset Management (B) SDN BHD 90.55 SDN BHD (Private Investment Advisor Asset management Limited Company) License Panama BNP Paribas - Panama branch 100.00 Sucursal Banking license Inactive - being deregistered BNP Paribas (Panama) SA 99.68 Sociedad anonima - Inactive - In liquidation BNP Paribas Wealth Management - Panama branch 100.00 Sucursal Banking license Inactive - being deregistered Philippines BNP Paribas Investments (Phils.) Inc. 65.36 Corporation Investment company Investment company BNP Paribas - Manila branch 100.00 Branch Offshore banking Commercial bank license FPSP Holdings Corporation 68.97 Corporation - Holding company
6.2 Appropriation of income and dividend 6 distribution for the year ended 31 December 2010
The Board of Directors will propose the following income and dividend distribution for the 2010 fi nancial year at the Annual General Meeting on May 2011:
In millions of euros Net income 3,465 Unappropriated retained earnings 15,804 TOTAL INCOME TO BE APPROPRIATED 19,269 Dividend 2,518 Retained earnings 16,751 TOTAL APPROPRIATED INCOME 19,269
The total proposed dividend to be paid to BNP Paribas Shareholders is EUR 2,518 million, which corresponds to EUR 2,10 per share (with a par value of EUR 2,00) based on the number of shares in issue at 31 janvier 2011.
2010 Registration document and fi nancial report - BNP PARIBAS 329 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 BNP Paribas SA fi ve-year fi nancial summary
6.3 BNP Paribas SA fi ve-year fi nancial summary
2006 2007 2008 2009 2010 Share capital at year-end
■ Share capital (in euros) 1,860,934,954 1,810,520,616 1,824,192,214 2,370,563,528 2,397,320,312
■ Number of common shares in issue 930,467,477 905,260,308 912,096,107 1,185,281,764 1,198,660,156
■ Number of convertible bonds in issue None None None None None Results of operations for the year (in millions of euros)
■ Total revenues, excluding VAT 37,957 47,028 48,642 33,104 28,426
■ Earnings before taxes, depreciation, amortisation, and provisions 5,024 5,257 3,400 7,581 7,193
■ Income tax expense (45) 285 1,201 (540) (118)
■ Earnings after taxes, depreciation, amortisation, and provisions 5,375 4,532 715 4,009 3,465
■ Total dividend payout (1) 2,892 3,034 912 1,778 2,518 Earnings per share
■ Earnings after taxes but before depreciation, amortisation, and provisions 5.36 6.12 5.04 5.94 5.90
■ Earnings after taxes, depreciation, amortisation, and provisions 5.76 5.00 0.78 3.38 2.89
■ Dividend per share (1) 3.10 3.35 1.00 1.50 2.10 Employee data
■ Number of employees at year-end 46,152 47,466 47,443 46,801 49,671
■ Total payroll expense (in millions of euros) 3,376 3,554 3,112 3,812 3,977
■ Total social security and employee benefi t charges (in 6 millions of euros) 1,474 1,106 1,053 1,750 1,141 (1) Subject to the approval from the Shareholder’s General Meeting of 11 May 2011.
330 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Subsidiaries and associated companies of BNP Paribas SA at 31 December 2010 6
6.4 Subsidiaries and associated companies of BNP Paribas SA at 31 December 2010
Reserves and retained earnings before income Last published net Interest held by Share capital appropriation income BNP Paribas SA NAME Currency In millions of the currency unit in % I. Detailed information about subsidiaries and associated companies whose book value exceeds 1% of BNP Paribas SA’s share capital 1. Subsidiaries (more than 50%-owned) ANTIN PARTICIPATION 5 EUR 170 18 1 100.00% AUSTIN FINANCE EUR 799 212 48 92.00% BANCA NAZIONALE DEL LAVORO SPA EUR 2,077 2,832 32 100.00% BANCO BNP PARIBAS BRASIL SA BRL 506 629 156 84.10% BANCWEST CORPORATION USD 1 (1,868) 118 98.74% BANEXI HOLDING CORPORATION USD 59 (35) 46 100.00% BANQUE DE BRETAGNE EUR 53 51 17 100.00% BNL INTERNATIONAL INVESTMENT SA EUR 110 330 (17) 100.00% BNP INTERCONTINENTALE EUR 31 5 (1) 100.00% BNP PARIBAS ASSURANCE EUR 965 3,713 318 100.00% BNP PARIBAS BDDI PARTICIPATIONS EUR 46 59 50 100.00% BNP PARIBAS CANADA CAD 533 249 46 100.00% BNP PARIBAS CHINA LTD USD 520 135 20 100.00% BNP PARIBAS COMMODITY FUTURES LTD. USD 75 84 32 100.00% 6 BNP PARIBAS DEVELOPEMENT SA EUR 89 267 27 100.00% BNP PARIBAS EGYPT EGP 1,700 167 156 95.19% BNP PARIBAS EL DJAZAIR DZD 10,000 3,299 4,374 84.17% BNP PARIBAS EQUITIES FRANCE EUR 6 21 (1) 99.96% BNP PARIBAS ESPANA SA EUR 52 37 (3) 99.59% BNP PARIBAS FACTOR EUR 3 23 14 100.00% BNP PARIBAS FACTOR PORTUGAL EUR 13 67 2 64.26% BNP PARIBAS HOME LOAN COVERED BONDS EUR 175 2 0 100.00% BNP PARIBAS INTERNATIONAL BV EUR 14 1,470 1,662 100.00% BNP PARIBAS INVESTMENT PARTNERS EUR 23 2,481 21 66.67% BNP PARIBAS IRELAND EUR 902 402 56 100.00% BNP PARIBAS LEASE GROUP SPA EUR 164 108 (17) 73.83% BNP PARIBAS PERSONAL FINANCE EUR 453 4,691 116 98.94% BNP PARIBAS PUBLIC SECTOR EUR 24 0 7 100.00% BNP PARIBAS REAL ESTATE EUR 329 124 62 100.00% BNP PARIBAS REUNION EUR 25 26 7 100.00% BNP PARIBAS SB RE EUR 450 15 12 100.00% BNP PARIBAS SECURITIES ASIA LTD. HKD 1,578 404 (129) 100.00% BNP PARIBAS SECURITIES JAPAN LTD. JPY 80,800 28,698 (19,061) 100.00% BNP PARIBAS SECURITIES KOREA COMPANY LTD. KRW 250,000 (5,586) (3,801) 100.00%
2010 Registration document and fi nancial report - BNP PARIBAS 331 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Subsidiaries and associated companies of BNP Paribas SA at 31 December 2010
Reserves and retained earnings before income Last published net Interest held by Share capital appropriation income BNP Paribas SA NAME Currency In millions of the currency unit in % BNP PARIBAS SECURITIES SERVICES - BP2S EUR 165 420 21 94.44% BNP PARIBAS SERVICES HONG KONG LTD. HKD 336 (97) 0 100.00% BNP PARIBAS SUISSE SA CHF 320 2,895 421 53.15% BNP PARIBAS UK HOLDINGS LTD. GBP 1,227 16 38 100.00% BNP PARIBAS VOSTOK LLC RUB 1,890 216 (212) 100.00% BNP PARIBAS VPG MASTER LLC USD 34 12 0 100.00% BNP PARIBAS WEALTH MANAGEMENT EUR 103 239 (49) 100.00% BNP PARIBAS ZAO RUB 4,162 760 (37) 100.00% BNP PUK HOLDING LTD. GBP 257 24 (29) 100.00% BNPP ANDES SA (2) USD 50 0 0 100.00% BNPP SECURIT JAPAN PREPAR CO LTD. JPY 3,001 0 0 100.00% COBEMA EUR 439 1,677 51 99.20% COMPAGNIE D’INVESTISSEMENTS DE PARIS - C.I.P. EUR 395 309 26 100.00% COMPAGNIE FINANCIERE OTTOMANE SA EUR 9 277 1 96.85% CORTAL CONSORS EUR 58 290 16 94.21% DEALREMOTE LIMITED GBP 90 (58) 0 100.00% FIDEX HOLDINGS LTD. EUR 300 (5) 6 100.00% FINANCIERE BNP PARIBAS EUR 227 218 10 100.00% FINANCIERE DES ITALIENS SAS EUR 412 26 2 100.00% FINANCIERE DU MARCHE ST HONORÉ EUR 42 9 (5) 100.00% 6 FORTIS BANQUE SA EUR 9,375 2,526 3,245 74.93% FORTIS LEASE GROUP SA EUR 2,261 521 8 65.00% GESTION ET LOCATION HOLDING EUR 266 931 21 99.24% GRENACHE & CIE SNC EUR 832 596 71 56.14% HAREWOOD HELENA 1 LTD. (1) USD 25 (1) (1) 100.00% HAREWOOD HOLDINGS LTD. GBP 100 20 18 100.00% IMS ABS FCP EUR 33 0 3 100.00% OMNIUM DE GESTION ET DE DEVELOPEMENT IMMOBILIER EUR 459 51 58 100.00% OPTICHAMPS EUR 411 41 2 100.00% PARIBAS DERIVES GARANTIS SNC EUR 42 0 0 100.00% PARIBAS NORTH AMERICA INC. USD 2,839 1,149 142 100.00% PARILEASE SAS EUR 54 267 1 100.00% PARTICIPATIONS OPERA EUR 410 28 2 100.00% PETITS CHAMPS PARTICIPACOES E SERVICOS SA BRL 102 (17) 36 100.00% PT BANK BNP PARIBAS INDONESIA IDR 726,320 337,822 69,821 99.00% ROYALE NEUVE I GBP 0 503 1 100.00% SAGIP EUR 218 45 964 100.00% SOCIETE ORBAISIENNE DE PARTICIPATIONS EUR 311 (414) 6 100.00% TAITBOUT PARTICIPATION 3 SNC EUR 792 37 (4) 100.00%
332 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Subsidiaries and associated companies of BNP Paribas SA at 31 December 2010 6
Reserves and retained earnings before income Last published net Interest held by Share capital appropriation income BNP Paribas SA NAME Currency In millions of the currency unit in % UCB ENTREPRISES EUR 97 100 1 100.00% UKRSIBBANK UAH 7,512 (2,197) (2,429) 100.00% WA PEI FINANCE COMPANY LTD. HKD 341 (300) 306 100.00% 2. Associated Companies (10% To 50%-Owned) BANQUE DE NANKIN CNY 2,969 13,676 2,377 12.68% BANQUE DU SAHARA LSC LYD 252 344 (99) 19.00% BANK OF THE WEST USD 0 10,467 236 16.78% BGL BNP PARIBAS EUR 713 4,536 471 15.96% BNL VITA SPA EUR 301 160 12 49.00% CREDIT LOGEMENT (1) EUR 1,254 62 120 16.50% ERBE EUR 120 2,374 86 47.01% GEOJIT BNP PARIBAS FINANCIAL SERVICES LTD. INR 227 2,867 543 33.85% GESTION OBLIGATAIRE DIVERSIFIEE EUR 169 3 0 28.73% PARGESA HOLDING SA (1) CHF 7,668 0 792 15.00% STRADIOS FCP FIS EUR 270 0 (1) 34.44% VERNER INVESTISSEMENTS EUR 15 325 79 50.00%
Subsidiaries Associated companies In millions of euros French Foreign French Foreign II. General information about all subsidiaries and associated companies Book value of shares ■ Gross value 20,618 36,457 3,114 2,036 6 ■ Net value 19,900 35,366 2,512 1,698 Loans and advances given by BNP Paribas SA 104,762 21,775 1,501 2,066 Guarantees and endorsements given by BNP Paribas SA 60,770 33,758 9,559 72 Dividends received 1,035 419 128 74 (1) At 31 December 2009. (2) At 31 October 2009.
The whole of the transactions with the non-consolidated parts were concluded with the normal conditions from market.
2010 Registration document and fi nancial report - BNP PARIBAS 333 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Details of equity interests acquired by BNP Paribas SA in 2010 whose value exceeds 5% of the share capital of a French company
6.5 Details of equity interests acquired by BNP Paribas SA in 2010 whose value exceeds 5% of the share capital of a French company
Change in interest to more than 5% of capital Not listed CENTRE DE DIVERTISSEMENT ASSOCIÉS SNC SNC Not listed CHEYENNE HOTEL ASSOCIÉS SNC SNC Not listed HOTEL NEW YORK ASSOCIÉS SNC SNC Not listed HOTEL SANTA FE ASSOCIÉS SNC SNC Not listed NEWPORT BAY CLUB ASSOCIÉS SNC SNC Not listed SEQUOIA LODGE ASSOCIÉS SNC SNC Change in interest to more than 10% of capital None Change in interest to more than 20% of capital Not listed KARUVEFA SCI SCI Change in interest to more than 33.33% of capital Not listed Compagnie de Financement pour les Loisirs (COFILOISIRS) SA Change in interest to more than 33.33% of capital Not listed B.P.C.DÉVELOPPEMENT SA Not listed FIMAGEN HOLDING SA Not listed FORTIS BANQUE FRANCE - SA SA Not listed FORTIS ÉPARGNE RETRAITE SA 6 Not listed FORTIS MEDIACOM FINANCE SA Not listed FORTIS SERVICES MONÉTIQUES SA Not listed PARISIENNE D’ACQUISITION FONCIÈRE SAS Not listed PHILIPPE LE BON SCI SCI Not listed FORTIS GESTION PRIVÉE SA Not listed SOFICINEMA SA
334 2010 Registration document and fi nancial report - BNP PARIBAS INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS Statutory Auditors’ report on the fi nancial statements 6
6.6 Statutory Auditors’ report on the fi nancial statements
Deloitte & Associés PricewaterhouseCoopers Audit Mazars 185, avenue Charles de Gaulle 63, rue de Villiers 61, rue Henri Regnault 92524 Neuilly-sur-Seine Cedex 92208 Neuilly-sur-Seine Cedex 92400 Courbevoie
This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of English speaking readers. The Statutory Auditors’ report includes information specifi cally required by French law in such reports, whether modifi ed or not. This information is presented below the opinion on the fi nancial statements and includes an explanatory paragraph discussing the Auditors’ assessments of certain signifi cant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the fi nancial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the fi nancial statements. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
BNP Paribas 16, boulevard des Italiens 75009 Paris
To the Shareholders,
In compliance with the assignment entrusted to us by your General Shareholders’ Meeting, we hereby report to you, for the year ended 31 December 2010, on:
■ the audit of the accompanying fi nancial statements of BNP Paribas, ■ the justifi cation of our assessments, and ■ the specifi c verifi cations and information required by law. 6 These fi nancial statements have been approved by the Board of Directors. Our role is to express an opinion on these fi nancial statements based on our audit.
I - Opinion on the fi nancial statements We conducted our audit in accordance with the professional standards applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the fi nancial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as the overall presentation of the fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion. In our opinion, the fi nancial statements give a true and fair view of the assets and liabilities and of the fi nancial position of the Company at 31 December 2010 and of the results of its operations for the year then ended in accordance with French accounting principles. Without qualifying our opinion, we draw your attention to the matter set out in note 1 to the fi nancial statements regarding the application of Comité de la Réglementation Comptable (CRC) Regulation 2009-03 concerning the recognition of fees received by credit institutions and incremental transaction costs incurred upon the granting or securing of loans.
2010 Registration document and fi nancial report - BNP PARIBAS 335 INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS 6 Statutory Auditors’ report on the fi nancial statements
II - Justifi cation of our assessments In accordance with the provisions of article L.823-9 of the French Commercial Code (Code de commerce) relating to the justifi cation of our assessments, we bring to your attention the following matters: Impairment provisions for credit and counterparty risk BNP Paribas records impairment provisions to cover the credit and counterparty risk inherent to its business (notes 1, 2.d, 3.a, 3.b, 3.c and 3.e to the fi nancial statements). We examined the control procedures applicable to monitoring credit and counterparty risk and impairment testing methods. Measurement of fi nancial instruments BNP Paribas uses internal models and methodologies to value its positions on fi nancial instruments which are not traded on active markets, as well as to determine certain provisions and assess whether hedging designations are appropriate. We examined the control procedures applicable to identifying inactive markets, verifying these models and determining the inputs used. Measurement of investments in non-consolidated undertakings and equity securities held for long-term investment Investments in non-consolidated undertakings and equity securities held for long-term investment are measured at value in use based on a multi-criteria approach as described in notes 1 and 3.e to the fi nancial statements. As part of our assessment of these estimates, we examined the assumptions underlying the determination of value in use for the main portfolio lines. Provisions for employee benefi ts BNP Paribas raises provisions to cover its employee benefi t obligations, as described in notes 1 and 5.b to the fi nancial statements. We examined the method adapted to measure these obligations, as well as the main assumptions and inputs used. These assessments were made as part of our audit of the fi nancial statements taken as a whole, and therefore contributed to the opinion we formed which is expressed in the fi rst part of this report.
III – Specifi c verifi cations and information In accordance with professional standards in France, we have also performed the specifi c verifi cations required by French law. We have no matters to report as to the fair presentation and consistency with the fi nancial statements of the information given in the management report of the Board of Directors, and in the documents addressed to the shareholders with respect to the fi nancial position and the financial statements. Concerning the information given in accordance with the requirements of article L.225-102-1 of the French Commercial Code relating to remuneration and benefi ts received by corporate offi cers and any other commitments made in their favour, we have verifi ed its consistency with the financial statements, or with the underlying information used to prepare these fi nancial statements and, where applicable, with the information obtained by your Company from companies controlling it or controlled by it. Based on this work, we attest to the accuracy and fair presentation of this information. 6 In accordance with French law, we have verifi ed that the required information concerning the purchase of investments and controlling interests and the identity of shareholders and holders of the voting rights has been properly disclosed in the management report.
Neuilly-sur-Seine and Courbevoie, 7 March 2011
The Statutory Auditors
Deloitte & Associés PricewaterhouseCoopers Audit Mazars Pascal Colin Patrice Morot Guillaume Potel
336 2010 Registration document and fi nancial report - BNP PARIBAS SOCIAL AND ENVIRONMENTAL 7 INFORMATION
7.1. Human resources development 338 Workforce evolution 338 Developing and strengthening a shared identity 339 Promoting diversity 341 Supporting employees in being actors of development and change 346 Retaining and motivating employees in the long-term 350 Listening to what people say 354
7.2. NRE Appendices – Social chapter 357
7.3. NRE Appendices – Environmental chapter 366
2010 Registration document and fi nancial report - BNP PARIBAS 337 SOCIAL AND ENVIRONMENTAL INFORMATION 7 Human resources development
7.1. Human resources development
WORKFORCE EVOLUTION
BREAKDOWN BY GEOGRAPHIC AREA At end-December 2010, the Group had 205,348 full-time equivalent employees (*) (FTEs), an increase of 2,256 compared with end-December 2009.
32% France
9% 5% Italy Asia
2% 9% South America Belgium
7% 2% North America Luxembourg
5% Africa
27% 1% ns Middle-East Oceania Europe (excl. domestic markets)
2005 2010 France 55,499 65,357 Rest of Europe 25,205 96,836 North America 14,979 15,137 Asia 4,785 11,012 Africa 5,661 9,811 Latin America 2,363 4,323 7 Middle-East 868 2,233 Oceania 420 638 TOTAL 109,780 205,348
In 2010, the breakdown of the worldwide workforce by geographic area remained stable compared with 2009. Employees working in the four domestic markets (France, Belgium, Italy, Luxembourg) accounted for 52% of the Group’s total workforce.
(*) Including 183,999 FTEs in fi nancial positions.
338 2010 Registration document and fi nancial report - BNP PARIBAS SOCIAL AND ENVIRONMENTAL INFORMATION Human resources development 7
TOTAL WORKFORCE BY BUSINESS LINE
23.7% Europe-Mediterranean 3.7% Group Functions & Others 7.7% BancWest
14.5% 20.2% Investment Solutions Personal Finance
5.0% 9.7% 72.1% Equipment Solutions CIB Retail Banking 0.1% Retail Banking Central Functions 22.3% French Retail Banking 11.4% BeLux Retail Banking 9.6% BNL bc
BNP Paribas Fortis employees were reallocated to the various business lines in 2010 and a new operational entity “BeLux Retail Banking” was created within the Retail Banking division.
DEVELOPING AND STRENGTHENING A SHARED IDENTITY
THE GROUP’S VALUES Action-centred values For BNP Paribas, the goal of being “the bank for a changing world” stems Accordingly, the Group’s top managers have spelt out the meaning of from the core values chosen by the new Group’s top management at these values and provided guidance on the individual and collective the time of the merger between BNP and Paribas in 2000. These values behaviour they call for: are Responsiveness, Creativity, Commitment and Ambition. They express a desire to: Responsiveness means rapidly appraising situations, identifying ■ create a united global, multicultural Group; opportunities and risks, making decisions and taking effective ■ forge a strong, unique identity; and action. 7 ■ enlist employee support for the corporate mission by giving that Creativity means promoting new initiatives and ideas and mission lasting sense. rewarding their originators. Commitment involves devoting best efforts to customer service A unifying approach and team success, while meeting the highest standards of BNP Paribas is a global group and as such, takes great care to respect the behaviour. cultural and personal backgrounds of all its employees in the conduct Ambition refl ects an appetite for challenge and leadership, with of its business and its human resources management processes. The the goal of winning, as a team, a series of contests in which the Group’s core values unite the diverse group of people that make up the client is judge. BNP Paribas community, giving them a strong sense of shared identity.
A distinctive corporate identity BNP Paribas expresses its distinctive identity in all its businesses and territories. It has chosen to focus on distinctive values, at both an individual and collective level: only three other global groups have included Commitment and Ambition among their core values, and BNP Paribas is unique in choosing Creativity and Responsiveness.
2010 Registration document and fi nancial report - BNP PARIBAS 339 SOCIAL AND ENVIRONMENTAL INFORMATION 7 Human resources development
SHARING CULTURES THROUGH GROUP INTERNAL COMMUNICATIONS, A MEANS OF ACADEMIES PROMOTING EMPLOYEE COHESION Internal communications focus on sharing information, developing BNP Paribas Academies exchanges between employees and harnessing any synergies between The corporate culture within a large group strengthens the sense of business lines. Through the various internal communication media belonging and gains employee loyalty. It was with this in mind that available to all employees (Ambition quarterly magazine, Starlight (*) the BNP Paribas Academies were established. These organisations are monthly webTV, Echo’Net . Group Flash weekly newsletter and web- designed to evolve over time and are managed for the long term. Their radio), employees have been kept fully informed of changes in the Group role is to: (which has grown from 80,000 to 200,000 employees in ten years), new regulations in world fi nance and the major projects and strategy ■ develop and promote policies, principles and technical expertise with implemented by the Group. The Internal Communications Department the aim of spreading and sharing cultures; was also tasked with restoring employee confi dence and making them ■ provide a multi-method training facility, particularly to encourage the proud to work for a responsible Group that serves the real economy. In exchange of best practices; 2010, there were many opportunities for exchange between employees ■ contribute to the growth, expansion and development of communities and top management. For example, they were able to put questions within the Group. directly to Baudouin Prot during an internal video presenting the annual results. Breakfast meetings were also organised monthly between top Launch of the Risk Academy: focus on risk managers and employees. BNP Paribas has always had a strong risk management culture. The Group’s rapid growth in the past fi ve years and the ongoing crisis have PRIDE IN BELONGING highlighted the need to strengthen and nurture its risk management culture. With this in mind, BNP Paribas launched the Risk Academy, aimed Observance of the United Nations Global Compact at the entire Group, on 31 May 2010. This organisation forms part of an evolutionary and participative approach, involving all BNP Paribas With a presence spanning more than 80 countries, BNP Paribas operates business lines and support functions. in a variety of political and regulatory environments. This means that the Group must take particular care to ensure compliance with the principles Supported by the Group Executive Committee, the Risk Academy has of the United Nations Global Compact, to which it is a signatory. three goals: In 2010, 46 countries were identifi ed as representing the greatest risk ■ strengthen and disseminate the risk management culture throughout in terms of human rights by authoritative organisations in this fi eld.(**) the Group; BNP Paribas is present in fourteen of these countries, employing staff ■ promote training and professional development in the area of risk accounting for 4.7% of its total global headcount. In the most risk-exposed management; countries, where regulations tend to be less stringent, local human ■ develop communities of risk management practitioners and encourage resources departments apply Group rules to all employee management them to share their knowledge and skills. procedures to guarantee compliance with the Global Compact. The Risk Academy provides all Group employees with access to the various products and services.
Management Academy project: focus on people 7 The Group is developing the bedrock of a common managerial culture through a set of management principles. The Management Academy aims to help managers share this culture and best practices as well as develop their skills. It will encourage propagation of the management principles drawn up by the Executive Committee. Like the Risk Academy, it will be an open organisation available to the Group worldwide.
(*) BNP Paribas Intranet site. (**) Source: Amnesty International, Freedom House and Eiris.
340 2010 Registration document and fi nancial report - BNP PARIBAS SOCIAL AND ENVIRONMENTAL INFORMATION Human resources development 7
BNP Paribas and seven other major French groups have helped to found Some of the initiatives supported by the Group in 2010: Entreprises pour les Droits de l’Homme (EDH – companies for human ■ in France, some one hundred employees volunteered for the “Nos rights). EDH seeks to identify practical ways in which companies can Quartiers ont des Talents” campaign, which involves sponsoring ensure observance of fundamental human rights. It brings together young graduates who could potentially be discriminated against experts in human rights, global NGOs and academics, and it undertakes during recruitment processes; continuation of Projet Banlieues, a to promote its approach to companies. A training module was devised in programme to help create jobs and social relationships in sensitive 2009 and is destined for use by managers and heads of Human Resources neighbourhoods and to support youngsters with academic diffi culties; working in at-risk countries. signing of a BNP Paribas HR Charter by all Group entities in the Seine- Saint-Denis district north of Paris, uniting their initiatives to promote BNP Paribas’ involvement in society employment, training and inclusion; As a responsible citizen, the BNP Paribas Group contributes to the growth, ■ in Italy, partnership with the “Libera” association, which aims to expansion, economic and social development of the countries in which it facilitate the integration, consolidation and autonomy of young operates through outreach initiatives that fall into three major categories: people from immigrant families, in particular by fi nancing training and providing social and language support; ■ combating discrimination of all kinds and promoting diversity: initiatives aim to provide personal assistance for victims of discrimination on the ■ in the United States, creation of a partnership between BNP Paribas grounds of health, age or origin; New York and Prep for Prep, an association that fi nances the education of promising students from minority populations. ■ combating exclusion, with the aim of providing fi nancial support for populations suffering from economic and social exclusion; ■ developing and transferring knowledge: promoting the transfer and acquisition of knowledge from learning to read and write right through to cutting-edge research.
PROMOTING DIVERSITY
GROUP-WIDE POLICIES
Diversity of backgrounds
Equality in recruitment BNP Paribas conducts campaigns in France and elsewhere to make sure it recruits from a wide variety of backgrounds, in particular by taking part in specialist recruitment forums and fairs to promote equal opportunities. The Group also takes ongoing action to prevent discrimination when recruiting, including ongoing checks on the job application screening process and interview reports, continuation of “immediate interview” 7 campaigns and renewed audits. To ensure that policies are observed, the Group has invested considerable effort in raising employee awareness over the past few years by developing a practical recruitment guide that includes:
■ a Code of Ethics for all Group employees involved in the recruitment process; ■ a guide to conducting personal interviews; ■ a grid providing a formal record of the decision taken following the candidate’s interview. In 2009, managers responsible for hiring decisions within Group entities were given guidelines on non-discrimination during awareness raising events and through a new Diversity portal available on the Group Intranet. These guidelines aim to ensure that the recruitment process is managed in an objective, transparent and respectful manner.
2010 Registration document and fi nancial report - BNP PARIBAS 341 SOCIAL AND ENVIRONMENTAL INFORMATION 7 Human resources development
Awareness raising events continued throughout the year to train Gender equality managers responsible for recruitment. For example, in order to combat In 2004, as required by the law, BNP Paribas chose to examine the stereotyping, managers and HR practitioners continued to benefi t from conditions under which gender equality was being upheld within the the “Managing diversity as a performance lever” training module. Over Bank’s operations. Although well represented in the workforce, in some 1,500 employees were trained, mainly in France, the United States, cases women face a “glass ceiling” which keeps them from rising above a Luxembourg, the United Kingdom, Switzerland and Bahrain. certain level. In recognition of this issue, the Group has committed itself The Group is developing tools to ensure that its non-discrimination to foster equality of opportunity and treatment between men and women principles are observed. For example, control over recruitment activity at all stages of professional life and to do more to promote women into in France was initiated during 2009, comprising quarterly audits of the managerial and supervisory positions. recruitment process for several candidates, and auditing the quality of Globally, the percentage of women promoted into senior management interview reports and comments made on job application forms in the job positions (as defi ned in the banking industry collective agreement) or application management database. In order to improve the recruitment executive management positions (for subsidiaries not governed by that process further, these initiatives were continued and strengthened agreement in France) stood at 39% in France in 2010, versus 28.5% in during 2010, with the introduction of periodical audits of advertisements 2007. published on the recruitment site (selection criteria announced vs. selection criteria used to screen CVs), auditing the quality of managers’ Objective 2012: 20% of women in senior management interview reports and the quality of the interviews themselves, by positions within the Group having a dual interview process with both operational managers and Diversity management is a key component of organisational effi ciency. HR practitioners. Top management has therefore set an ambitious goal in this area. By In addition, an audit on discrimination was also conducted in 2010, which 2012, women will occupy 20% of the senior management positions within aimed to measure opportunity gaps in the recruitment process relative the Group. This will entail a concerted effort to promote at least 100 to four criteria: gender, origin, disability and age. additional women to senior management positions. A workshop was organised with representatives of eleven countries to At end-2010, almost 19% of the Group’s senior managers were women. share best practices in recruitment and to work on setting up a Group job application management database. This tool is due to come on stream Women on the Board of Directors in 2011 and will help strengthen the Group’s employer brand, provide At 31 December 2010, women accounted for 27.8% of the an audit trail of the various stages in the recruitment process and better BNP Paribas Board of Directors, one of the highest levels in France. manage any risk of discrimination. Major efforts are devoted to external communication of the Group’s four actions to promote diversity, both on the BNP Paribas Gender equality networks corporate site www. bnpparibas.com/diversity and the external blog www. forachangingworld.com. Internationalisation of senior management As BNP Paribas has grown and expanded internationally, the Group’s worldwide workforce has increased over successive years since 2000, exceeding 205,000 employees at end-2010. In the last ten years, the The BNP Paribas MixCity network proved highly popular throughout percentage of employees outside France has risen from 40.8% to 68.2%. 2010 and celebrated its fi rst anniversary. The objective is to create an 7 By employing local people, BNP Paribas directly contributes to the active, value-added social network within the Company and to serve as development of the countries in which it operates. This not only ensures an advocate for diversity both within the organisation and within society. that the Group becomes closely embedded within each culture and At end-2010, BNP Paribas MixCity had more than 400 members. The community, but also provides local employees (*) with access to positions results of a satisfaction survey revealed that 97% of members are happy of higher responsibility within the subsidiaries and branches while with the quality and organisation of BNP Paribas MixCity. enabling them to pursue careers within the Group.
(*) Non-expatriates.
342 2010 Registration document and fi nancial report - BNP PARIBAS SOCIAL AND ENVIRONMENTAL INFORMATION Human resources development 7
More generally, networks for women continued to develop throughout ■ the various networks in France, Luxembourg, the United Kingdom and the Group: the Gulf countries connect regularly through conference calls to share best practices. ■ the Women’s Internal Network (WIN) celebrated its fi rst anniversary at BNP Paribas London; An interbank association called “Financi’Elles” has also been launched in France. ■ CIB USA is a leading partner of Women in Finance, a not-for-profi t association in the United States that runs a public forum on important contemporary issues such as business and fi nance; Age diversity Age pyramids vary considerably within the BNP Paribas Group depending on the country and business line, requiring a variety of different policies for older employees.
➤ GROUP AGE PYRAMID – PHYSICAL HEADCOUNT – DECEMBER 2010
266 182 65 plus Women: 110,983 Men: 94,778 53.9 % 1,396 2,025 46.1 % 60 to 64
8,438 9,949 55 to 59
9,932 11,009 50 to 54
11,007 10,432 45 to 49
11,307 10,869 40 to 44
16,093 14,534 35 to 39
20,754 16,794 30 to 34
22,119 14,529 25 to 29
9,671 4,455 Under 25
Average age across the Group: 39.2 years.
The Group’s age pyramid remains balanced overall. The lower age BNP Paribas Arbitrage) signed in January 2010. These action plans and groups are predominant in most of the Group’s divisions, while the age agreement all aim to promote the continued employment of seniors pyramid of the Group’s retail banking operations in Western Europe is through positive provisions coupled with quantitative indicators that predominantly comprised of older employees. This diversity requires take account of the demographic characteristics of each entity. They specifi c policies to be defi ned locally depending on the issues. are in keeping with the global, forceful policy of non-discrimination and professional equality to which the BNP Paribas Group has been committed for several years now. LOCAL POLICIES TO PROMOTE DIVERSITY 7 At BNP Paribas SA, half of all employees are aged 45 plus and more The Group’s ambitious Diversity policy is implemented in numerous than one third are aged 50 plus. To meet the overall objective of keeping countries and adapted to suit their own specifi c legal, cultural and older employees in employment under the best possible conditions, the contextual needs. provisions cover three areas: career management, professional training and health in the workplace. France For example, in career management, every employee regardless of age Seniors is guaranteed at least one interview with his or her HR manager every fi ve years. The Bank also undertakes to encourage professional mobility Group entities in France have set out their policy for the employment of of older employees and to give everyone equal rights to training. Lastly, older people either in an action plan (e.g. BNP Paribas SA, BNP Paribas employees aged 55 plus will be given more frequent health checks by Personal Finance, etc.) or in a three-year company agreement (e.g. the Bank’s health and safety department. BNP Paribas Assurance, BNP Paribas Leasing Solutions, Arval, Ségécé,
2010 Registration document and fi nancial report - BNP PARIBAS 343 SOCIAL AND ENVIRONMENTAL INFORMATION 7 Human resources development
Leveraging the Label Diversité officers in the various divisions, business lines and functions. An awareness campaign was also conducted at the time of the annual audit of compliance with the agreement. As regards recruitment, to meet the target of employing 170 disabled people at BNP Paribas SA, the Projet Handicap team in France developed an action plan to attract applications from people with disabilities. As a result, the number of CVs sent directly to Projet Handicap doubled in 2010 compared with 2009. At end-2010, the recruitment target was The Label Diversité awarded in January 2009 not only recognises the 65% achieved. Bank’s efforts to promote diversity since 2004 but also provides a Signifi cant efforts are made to retain and provide a proper career path for tremendous opportunity to go even further in building the commitment people who are either disabled when they are recruited or who become of all employees. Going even further means capitalising on our differences disabled during their career. The number of actions of this type almost in a “Spirit of Diversity” by avoiding self-segregation and raising employee doubled in 2010 compared with 2009, involving 87 people. awareness so that diversity becomes a true value. In June 2010, the follow-on audit carried out by Afnor, the certifi cation J’en Crois Pas mes Yeux (I can’t believe my eyes): body, which took place 18 months after the Label was fi rst obtained, “getting the message across in a practical yet fun covered new Group entities in its scope of certifi cation (new retail banking way” Departments and BNP Paribas Assurance). The outcome was favourable. Videos available on the Intranet show humorous scenes of daily A range of initiatives refl ects the reality of this Label: life actually experienced by two friends, one visually impaired the ■ Diversity training for all recruitment practitioners, which will soon be other not. They aim to help people understand each other better supplemented by sessions to raise awareness about the dangers of and communicate better. stereotyping. The aim is to make everyone aware of their prejudices. ■ A three-year partnership signed in 2010 with the government- sponsored “Plan Espoir Banlieues” programme to encourage Commitment to making the digital world more employment of young people living in sensitive urban areas and accessible neighbourhoods covered by an urban social cohesion contract. As part of this new partnership, BNP Paribas has committed to providing Projet Handicap took part in a knowledge transfer campaign to information about and promoting its business lines, encouraging make the PDF versions of documents published by the Group people to discover the Bank, mainly through internships, and helping available to the visually impaired. The fi rst to be available were young people from sensitive neighbourhoods to fi nd work. the Ambition magazine (from issue 33 onwards) and brochures on mobility and disability. ■ Support for the French National Employment Agency by taking part in the government-sponsored campaign to test recruitment via anonymous CVs. 2010 supplemental agreement on gender equality ■ Partnerships with public or private institutions and specialist BNP Paribas SA signed a long-term agreement on gender equality in the associations, such as the Afev (*), “Nos Quartiers ont des Talents” and workplace in July 2007. The agreement replaced the previous three-year Mozaïk RH. agreement, signed in April 2004. The agreement defi nes the principles to Company agreements be observed to promote equal opportunity and gender equality at work. It provides for means of fostering work-life balance and for bridging, 7 Disability: four-year renewal of the BNP Paribas SA over a period of three years, pay differences between men and women disability employment agreement signed in 2008 working at the same grades and with comparable levels of qualifi cations, (2008-2011) responsibility and professional effi ciency as determined by performance evaluations. A budget of EUR 3 million was set aside to reduce salary differentials in 2008 and 2009. The initiative was repeated in 2010, leading to the signature of a supplemental agreement in July 2010 with new ambitious commitments, including the creation of a Gender Equality Offi cer. The Group thus provides a national system for reviewing individual cases where employees believe they are being discriminated against. Integration of people with disabilities is a key aspect of BNP Paribas’ The agreement has led to steady growth over the past few years in the commitment to social responsibility. It has a forceful, long-term policy in number of women in management positions. At BNP Paribas SA they favour of the direct and indirect employment (via specialist institutions) accounted for 38.8% in 2005, 40.3% in 2006, 41.4% in 2007, 43.1% in 2008, of disabled people and their inclusion in the workplace. 44% in 2009 and 44.6% in 2010 (see NRE Appendices - Social chapter). In 2006, BNP Paribas exceeded the 2010 target of 40% set within the Ongoing awareness raising actions involve all employees, including banking industry for the feminisation of managerial employment. As of exhibitions, roving workshops and practical exercises on the theme of end-2009, it had achieved its 44% target one year ahead of schedule. The sensory impairment or physical disability. Specifi c sessions are held supplemental agreement sets a new target of 46% by the end of 2012. for recruitment practitioners, social workers and the Projet Handicap
(*) Association de la Fondation Etudiante pour la Ville.
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Parenthood and work-life balance Italy In 2009, the Group became a corporate member of the French “Parenthood BNL continues its efforts to integrate employees with disabilities. In 2010, Observatory”, an organisation which seeks to promote work-life balance, a survey was conducted among disabled employees. The HR managers and continued to pursue an active parenthood policy. also provided information about workstation adjustments that can be This year, several Group entities organised Family Days, including CIB, made to facilitate their integration. The results are already visible, with BNP Paribas Assurance, Cortal Consors and Group Human Resources. adapted buildings access, special offi ce equipment and software for The purpose of these initiatives is not only to show children where their visually impaired employees. parents work and what they do, but also to help develop the various The Bank has also taken steps in the area of gender equality. Thus, women Group bodies involved in parenthood issues. These events were hugely accounted for 40.8% of the workforce in 2010, versus 37.9% a year earlier. popular with employees as they provide a unique opportunity for They now account for 29.1% of managerial positions and 11.7% of top exchange, and they help to create a virtuous circle of motivation and management teams, versus 26.6% and 10.7% respectively in 2009. commitment at work. In addition, childcare facilities are made available to employees working Luxembourg in large entities that relocate their premises. For example, in June 2010, In terms of gender equality, women account for: BNP Paribas Securities Services France opened the “Les Petits Minotiers” crèche when it moved to its new premises at Pantin. ■ 9% of BGL BNP Paribas Executive Committee; ■ 14.6% of senior managers; Belgium ■ 25.7% of managers. Since its integration into the Group, BNP Paribas Fortis has pursued an active Diversity policy, defi ned on the basis of the results of a series United States of audits. The Diversity action plan was validated by the Executive CIB systematically sends all its managers on an “Inclusion and Committee of BNP Paribas Fortis, refl ecting a top-level commitment. Each Leadership” seminar and has introduced a system of assessment by business line has its own diversity working groups. The Bank received objectives on diversity for managers. support from the public authorities in presenting a Diversity plan in the three regions of Belgium. It also has professional networks of women, Hispanics, Asians, lesbians, gays, bisexuals and transsexuals (LGBT) and offers a professional network Specifi c actions are carried out to prevent discrimination. Managers, HR development workshop. Several events were organised to promote these executives and recruitment practitioners all receive training in combating networks. Each year, a Diversity Day takes place in New York. discrimination. E-learning is available to all managers. Combating discrimination is now included in interview technique training. United Kingdom BNP Paribas Fortis also reviewed the question of disability during its analysis of HR data in the fi rst quarter of 2010 as part of its general In this country, the Bank offers support for female employees returning diversity audit. A practical guide to the recruitment of people with from maternity leave and their managers to ensure a better understanding disabilities is being drawn up in partnership with Wheelit, the leading of each other’s expectations. BNP Paribas London has drawn up a best Belgian specialised recruitment site. practice guide to establish its own Diversity network. The fi rst lesbian, gay and bisexual network was created in the autumn.
Bahrain In February 2010, BNP Paribas launched the “BNP Paribas Kids Club” 7 for children aged under eighteen months. Appropriate equipment and facilities ensure a high degree of comfort and entertainment.
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SUPPORTING EMPLOYEES IN BEING ACTORS OF DEVELOPMENT AND CHANGE
A GROUP ON THE RECRUITMENT TRAIL Belgium In 2010, despite a total reduction of 750 employees under the Recruitment to meet the needs of each business integration plan between the entities controlled by the ex-Fortis Group and BNP Paribas, BNP Paribas Fortis ultimately recruited 1,250 new After a slowdown in global recruitment in 2009, with 15,000 new hires employees, mainly in commercial positions. In consultation with the versus 26,000 in 2008, the number of new hires for the Group as a Communications department, a new employer brand policy was drawn whole amounted to 24,559 in 2010. The countries recruiting the most up designed to position BNP Paribas Fortis as a fi rst-class employer in (*) are, in decreasing order, France, the United States, Russia, Ukraine India, the job market and to attract young talent. The “Your future starts today” Belgium and Turkey, with the four domestic markets taking a signifi cant campaign was a great success, particularly during the recruitment days 26.5% share of total new hires. organised nationwide. France 30,000 Main European territories excluding France* Italy Rest of world 25,000 On 11 October 2010, BNL organised its fi rst Recruitment Day in Rome. 20,000 40 candidates shortlisted from among the brightest graduates after 15,000 assessment tests, were welcomed by BNL managers. They visited the main Rome branch and talked with employees about their jobs before 10,000 being received by managers and HR executives. Some twenty candidates 5,000 were selected and received a letter confi rming their recruitment. Four 0 recruitment days will now be held each year by BNL. 2005 2006 2007 2008 2009 2010 Luxembourg (*) Belgium (from 2010 only), the UK, Italy, Russia, Turkey, Ukraine BGL BNP Paribas has a number of graduate programmes, such as the “Associate and Graduate Programme” for graduates with no or little work BNP Paribas, a popular employer experience. The Bank offers them a job but for the fi rst eighteen months gives them the opportunity to spend time in the different business lines France or functions and to learn about the Bank and its activities. At the end of A survey among 9,000 web users voted BNP Paribas the favourite French this period, the employee is assigned to a permanent job depending on employer on a national level and in the Paris region, based mainly on HR his or her skills and aspirations. In 2010, 19 university or business school policy criteria: quality of management, commitment to society, business graduates, aged 25 on average, took part in this programme: 68% were image and pride in belonging. from Luxembourg, 21% from France and 11% from Belgium. Higher profi le on a global level Germany As in previous years, BNP Paribas took part in Germany’s biggest job Ace Manager: successful second edition and launch fair (“Absolventenkongress”) in Cologne on 24 and 25 November 2010. of the third set The Group was represented by BNP Paribas and its various subsidiaries “Ace Manager” is a fun game designed by the Group to illustrate (BNP Paribas Leasing Solutions, BNP Paribas Real Estate, Commerzfi nanz the pivotal role played by the bank in fi nancing its clients’ projects and Cortal Consors). This combined approach helped to strengthen the 7 in the real economy. It forms part of the strategy to raise the Bank’s image in the job market and to position it as an attractive employer profi le and appeal of BNP Paribas with young people. in its business sector. The second version of this corporate game attracted twice as Almost simultaneously, a visit to the BNP Paribas Frankfurt branch was many participants in 2010 than 2009, with a total of 8,133 organised for a group of students from Maastricht university. The visit participants (2,711 teams of three students) from 98 countries on included a presentation of the branch’s business activities by its Corporate 5 continents. The operation showcased the BNP Paribas employer Secretary, followed by three case studies (Corporate Finance/Mergers brand to over one million students worldwide (versus 700,000 in &Acquisitions, Equity Derivatives and Leveraged Finance). The objective 2009) during the campus tours and promotional events organised was to forge a special relationship with the Maastricht university students to promote the contest. and to present BNP Paribas as a unique employer. The Ace Manager website has had more than 230,000 visitors since its inception and the Facebook page has over 2,300 fans.
(*) Strong development of automobile fi nance credit at points of sale through BNP Paribas Personal Finance in Russia and high employee turnover in Ukraine.
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UK Belgium Various interesting initiatives were taken to support BNP Paribas’ In 2010, BNP Paribas Fortis was very active in employer communication. numerous recruitment campaigns in the United Kingdom: After the “1,200 Talents” campaign promoting the recruitment of 1,200 permanent employees during the year, the Bank launched a special ■ fi lming of some fi fteen corporate videos for the “Graduate Recruitment recruitment campaign from 24 June to end August, with the aim of Website”, the most popular one tracing the trials and tribulations of a preparing for the new BNP Paribas Fortis employer branding campaign London trader entitled “A day in the life of a trader”; in Belgium. ■ creation of a “BNP Paribas CIB Students” Facebook page, which has 5,100 active users a month, with quizzes to test students’ fi nancial A specifi c site was set up for the campaign – www.summeriseyourtalents.be knowledge; – supported by a multi-channel approach (Facebook campaign, personalised e-mailing to graduates, press and web) generating visitors ■ a competition offering the winners an iPad. to the website.
BNP Paribas London enters Times Top 100 Graduate Italy Employers In October 2010, BNL won the Best University Project 2010 award, ahead In the United Kingdom, BNP Paribas has moved up to 91st place of 60 major groups including Coca-Cola, HSBC, Microsoft, Bosch, Vodafone, in the Times Top 100 Graduate Employers league table. McDonald’s and Accenture, during the fi fth Employer Branding Strategy conference in Rome. This event was organised by HR practitioners and These rankings are based on a survey of about 16,000 students in La Sapienza university. BNL’s project aims to identify talent. their fi nal year at some of Britain’s best universities. Since 2009, the Group has moved up ten places in the rankings thanks to its commitment and sustained efforts which will culminate in the EMPLOYEE INTEGRATION: development of a Graduate programme in 2011. A GROUP INITIATIVE, LOCAL INITIATIVES
A partnership policy with business schools and To strengthen the sense of belonging to the Group and to encourage universities exchange between business lines, the corporate integration initiative helps new entrants to learn about BNP Paribas and position their new France activity within the Group as a whole. It also helps employees to forge an Work-study training for students: a priority initial relationship with the Group. In 2010, 1,358 employees were employed on work-study contracts in In 2010, an integration package was made available worldwide. It France, a 29% increase over the 2009 intake of 1,054, bringing the total contains a welcome message from Baudouin Prot and an introductory to 2,000 at end-2010. Students following diploma and masters’ courses brochure presenting BNP Paribas. receive work-study training in a specifi c business line and obtain the In addition, all entities have their own local integration schemes either necessary experience to ensure that they are fully prepared for the world at division, business line or country level. of work when they graduate. Thanks to this training, the Bank has a pool of talented, young graduates with knowledge of its businesses and For example, in Luxembourg in 2010, as part of the merger between BGL culture, and whose potential has been assessed by the Bank over a long and BNP Paribas, the Team Contact scheme was implemented to help period. Work-study training not only helps to promote social mobility and integrate employees, the main objectives being to better understand professional insertion for participants but also enables them to receive a each other’s past and strengths, lift barriers and prejudices and prepare salary during their studies and, in some cases, to obtain grant assistance for future change. from companies for their university fees. The scheme enables young In Belgium, new joiners are welcomed during an Induction Day with people from all social backgrounds to obtain higher-level training and innovative content. The purpose is to present the Group’s values and 7 to enter the workforce. aims to new employees. In 2010, 52% of the young people on the scheme were offered a fi xed-term or permanent employment contract, versus 43% in 2009. INNOVATION AT THE HEART OF India-France partnership for fi nancing education grants BNP PARIBAS’ STRATEGY The HR teams in India and Recruitment teams in France have agreed to fi nance a term’s study at the ESSEC business school in Paris for fi fteen Spirit of Innovation programme students from India’s top universities. The purpose of this partnership is to retain these students over the long-term by helping to fi nance Innovation is one of the key drivers that will enable the BNP Paribas their studies. Group to adapt quickly in a constantly changing environment with a view to satisfying its customers in their quest for innovative products and In addition, the Group’s active campus management policy was services. To achieve this aim, the Bank involves its employees through continued and strengthened, particularly with the universities: two global the Spirit of Innovation programme. partnerships were signed in France with the University of Paris Est Créteil (UPEC, Paris XII) and Dauphine (Paris IX).
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Innovation stems from initiatives taken by experts whose job is to SUSTAINED EFFORTS IN SKILLS innovate and from suggestions made by employees about processes and DEVELOPMENT organisation structures. It leads to innovative managerial practices and drives debates on issues common to all businesses. Training for professional effi ciency For example, among the projects developed, Group Human Resources With the arrival of entities controlled by Fortis in the Group, BNP Paribas took the following actions: has gained a new dimension giving rise to new priorities. In a constantly ■ launch of the Déclic Mozaik operation designed to recruit young changing environment, the ability to retain employees and make sure graduates from the Seine St Denis neighbourhoods by giving them they contribute to implementing the Group’s new strategies is a key intensive coaching in how to behave at a recruitment interview ahead success factor. of their offi cial interviews with BNP Paribas recruitment practitioners; This creates new human resources challenges involving: ■ creation of a multimedia platform, a forum for communication, ■ exchange and work made available to young employees identifi ed empowerment; as High-Potential and taking part in the Share To Lead programme ■ developing a shared identity; (see section on Adapting and Rolling Out the Talent Development ■ career management. Programme). The training and skills development objectives are in keeping with and help to meet these challenges. They are: Innovation Awards ■ recognising the value of and retaining employees; In 2007, BNP Paribas launched the Innovation Awards to foster and ■ transmitting the corporate culture and strategic vision of the Group; reward employee creativity and expertise. ■ enhancing employees’ performance levels; The 2010 awards bore witness to the culture of innovation within the ■ Group, with 217 innovative projects submitted in 21 countries, 112 of increasing their employability within the organisation. which were shortlisted for the Group selection committee and 24 were The Group’s training catalogue is designed to meet these objectives award winners. by combining professional training for the business lines with cross-functional Group training which fosters a shared corporate culture and management principles.
BNP Paribas Campus
The Group training centre, in the magnificent setting of Louveciennes near Paris, is a fully-fledged corporate campus. It not only focuses on 7 building competencies but also on providing a forum for sharing ideas and nurturing the corporate culture. The centre caters to employees from all businesses, countries and backgrounds. In 2010, almost 25,000 employees attended the centre to participate in integration seminars, business-specific courses, cross-functional training programmes and major Group events. Information about the Campus is available in French, English, Italian and Dutch at http://www.campus-louveciennes.bnpparibas.com.
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Enhancing employee performance level Jobs and skills planning and forecasting
Business training Two specifi c measures have been adopted to support the Group’s external growth initiatives: cross-divisional job mobility and tighter coordination Training provided by the business lines is intended primarily to raise of external recruitment. the level of employees’ professionalism and expertise in their fi eld. For this reason, business lines establish training plans that seek to maintain For this purpose, in its four domestic markets, BNP Paribas has set up a competencies at the requisite level for employees to exercise their specifi c unit responsible for workforce planning and for taking a series of responsibilities. Training programmes are then developed with input workforce management measures. The planning tool is used to forecast from training specialists in order to make optimal use of new learning the level of staff turnover and job changes for the current and next two technologies. Training initiatives now combine classroom training with years in order to identify, in advance wherever possible, any need to e-learning, and the training approach is supplemented by testing to adapt the workforce. ensure that knowledge is assimilated. Workforce management and the adaptation requirements identifi ed are Knowledge transfer broken down into the various elements of human resources management, such as recruitment, internal mobility, training, etc. The scope of these Recognising the value of employees’ skills also means transferring their measures is tailored to the challenges and the extent of the employment knowledge to other Group employees. Training packages have been issues involved. developed for this purpose for trainers and mentors. In addition, the Group’s employment issues in France are monitored These courses, initiated at Group level and initially made available in and coordinated to ensure that HR policies, particularly in recruitment, France, provide a common base whilst respecting specifi c local needs. are consistent with the workforce position in all entities and, where They may be used either on a stand-alone basis or in support of a local necessary, to initiate and coordinate internal transfers. programme. More specifically as regards managing the integration of entities Developing employability controlled by Fortis with BNP Paribas, the Group is committed to respecting the cultural backgrounds and individual capabilities of Developing employees’ skills improves their employability and contributes staff members in accordance with its corporate values and practices. to internal mobility. Initiatives taken in 2010 in France encompass: The priority areas of focus for the Group are to promote the internal redeployment of employees where positions are eliminated, comply with ■ providing training that leads to a recognised qualifi cation; individual and collective employee benefi t obligations and ensure that ■ validation of knowledge under AMF regulations; appointment procedures are fair and based on professional criteria. As of 1 July 2010, the Group, as an investment services provider (ISP), To this end, all of the means available to implement restructuring is subject to new regulations that defi ne the minimum knowledge that measures in compliance with the terms of the Group’s social agreement employees involved in selling fi nancial products must have. have been used. To meet this requirement, a training and knowledge testing system is Furthermore, natural employee turnover in Belgium and the other being rolled out across the entire Group in France. countries concerned by the merger (e.g. the other domestic markets of the In Belgium, there has been a legal certifi cation requirement for several Group, namely, France, Italy and Luxembourg) will provide opportunities years now, covering all employees who are in contact with customers. for redeploying staff members whose positions are affected by the ■ Professional development through training in project management, planned reorganisations in Belgium. To this end, the Group has developed and operational management and effi ciency. specifi c resources to promote internal mobility (e.g. mobility centres, dedicated training budgets, support services for redeployed employees, etc.) and is committed to giving internal mobility priority over external 7 LONG-TERM EMPLOYMENT MANAGEMENT recruitment wherever possible. Due to the Group’s expansion, its total workforce has almost doubled in fi ve years. The Group faces two key challenges in adapting to its new size: France The redeployment of BNP Paribas Fortis workforce in France, involving ■ anticipating employment trends by forecasting the cumulative effects 1,600 people, is almost complete. of organic growth, productivity gains and the Group’s age pyramid, which will bring about an average of 1,100 retirements per year by Belgium 2020 at BNP Paribas SA in France alone; The business integration plan between BNP Paribas and BNP Paribas ■ developing the managerial resources needed not only to take the helm Fortis has involved some far-reaching reorganisation of the workforce as senior positions become available due to natural turnover, but also and skills. Despite major synergies in some business lines, recruitment to steer the Group’s development and external growth plans. was nonetheless the HR priority in 2010, thanks to investment in other business lines such as Private Banking and to the many employees retiring due to the age pyramid. Considerable efforts have been made to reposition the Group in the job market, including launching a recruitment campaign in March 2010, targeted communication actions designed to rebuild the employer brand in September 2010, and revamping our “jobs” website and introducing a system for employees to recommend candidates. Lastly, 1,250 people were hired on permanent employment contracts at BNP Paribas Fortis in 2010, in line with the needs identifi ed in the business plan.
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Italy Luxembourg In Italy, effective resource planning has improved the branch network’s Employment planning and management was affected mainly by the competency levels and supported its expansion. The target is to have Group’s decision to set up the Global Competence Centre for International 1,000 branches by end-2013. The fi rst priority was to recruit a substantial Wealth Management in Luxembourg, as well strengthening BNP Paribas number of new employees to replace the signifi cant natural attrition Securities Services. caused by retirements or early retirements, by holding innovative Thus the Mobility Centre, in conjunction with the business lines and recruitment days. A second priority was to carefully manage the functions, quickly redeployed the employees concerned to jobs that made opportunities for transferring over 450 employees from Group entities best use of their skills and capabilities. subject to restructuring, such as BNP Paribas Fortis Italy, Personal Finance and Findomestic, to BNL, for example by taking into consideration the All in all, the Bank has taken on almost 220 new employees. geographical distance between the Group’s locations in Italy. To do this, Spain the Group’s various legal entities in Italy pooled their efforts in mobility management, contacts with trade union organisations and certain The integration of the Spanish entities controlled by Fortis led to the aspects of the recruitment and training policy. proposal of a voluntary departure and early retirement plan, in agreement with the trade union organisations, in order to adjust the workforce to the new organisational structure of Corporate Investment Banking and Wealth Management. The plan will continue until the end of 2012. In addition, about thirty employees were transferred internally to other functions or geographic sites.
RETAINING AND MOTIVATING EMPLOYEES IN THE LONG-TERM
PERSONAL CAREER MANAGEMENT Structured, active mobility policy
Career management forms part of the Group’s human resources policy The issues and is based on a general principle of decentralisation. Each employee is assigned to a local career management offi cer. However, as part of the For BNP Paribas, mobility helps support the Group’s growth and the succession planning policy, two specifi c categories of employee have been development of its businesses. It is an effective way to meet the needs of identifi ed as requiring special monitoring and management at a more entities by optimising the use of skills available internally. Apart from the global level: Senior Management and High Potential employees. growth aspect, mobility is also a key factor in an employee’s career path. The main initiatives in 2009, which involved improving the career Lastly, in line with the HR vision, mobility makes an essential contribution management process by expanding the scope for identifying high- to the “social pact” guaranteed by the Group in its domestic markets. potential executives, continued in 2010. It was also a busy year due to It meets the following key objectives: fi rst, developing prospects for the integration of BNP Paribas Fortis with the Group. The various career advancement and supporting employees in their career path and, second, management processes (and the information systems supporting them) anticipating change and managing reorganisations. 7 were systematically reviewed in order to adapt them to the Group’s new Action principles dimensions and its more international stature. Internal mobility takes precedence over any external recruitment, but In addition, BNP Paribas’ career management policy enables employees follows the same principles as regards diversity and non-discrimination to progress within a coherent and structured framework. at each stage of the process. Career management is based fi rst and foremost on the relationship To provide employees with effective mobility opportunities in such a between the employee and his or her manager. The career managers’ large group, all job vacancies are posted on e-Jobs, an online internal role is to monitor this relationship and to follow up on each individual’s tool of vacant jobs, now available in 14 countries. The number of these career advancement. They are the fi rst-line of contact for employees in jobs posted on e-Jobs is growing steadily and in 2010 totalled over 3,489 all matters concerning their career path: advancement, mobility and worldwide including 2,646 in France. remuneration. They know the employees well through their appraisals, occasional or regular contacts with their managers and, of course, career interviews. They also make sure that there is no discrimination throughout the employee’s career.
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Leveraging talent Succession planning One of the Group’s most important tasks in terms of career management Adapting and rolling out the Talent Development consists of preparing for the future by ensuring long-term succession Programme for Executive Management positions. Succession planning committees BNP Paribas has developed a Talent Development Programme which which bring together managers from the various divisions and functions is designed to provide high-potential employees with international and Human Resources managers meet regularly, at all levels, to experience. The programme was devised jointly by operational and identify promising executives who show the potential to take up senior HR managers from the various Group entities. Its purpose is to ensure management positions within the organisation. Executive roles within the effective executive succession planning for Senior Managers and to keep Group provide a springboard for talented individuals whilst promoting pace with the Group’s growth. their integration within the Group and providing opportunities to develop The careers of High-Potential employees are therefore followed closely their leadership skills. and supportively through actions taken by the Human Resources managers. A COMPETITIVE COMPENSATION POLICY In addition to the training programmes provided by the divisions and IN LINE WITH INTERNATIONAL RULES business lines, the Talent Development Programme offers three training cycles to employees from all Group entities worldwide enabling them to acquire cross-functional skills. The sessions are held at the BNP Paribas Compensation for work and performance Campus. Work performed, skills, level of involvement in assigned tasks and level These cycles also help participants to forge close professional links across of responsibility are compensated by a fi xed salary which depends on all Group activities. employees’ experience and the market practices for each business. Variable compensation levels are determined by individual and International mobility collective performance over the year based on the objectives set. Variable To support the Group’s expansion, more and more employees are given the compensation takes different forms in the various business lines. opportunity to work in another country or another company to facilitate More generally, the Group’s compensation policy is founded upon the deployment of cross-functional operational strategies and promote principles of fairness and transparency which are supported by: the exchange of knowledge, skills and best practices. But mobility on an ■ international scale is not always easy to manage, either from a legal or an annual overall compensation review process; social point of view, because of need to comply with different regulatory ■ a strict delegation system which operates in accordance with environments. Consequently, a policy was implemented in 2010 to make guidelines set at Group level; sure that relocation from one country to another takes place in the most ■ a stronger governance by the Compliance, Risk and Finance committee fl exible way possible whilst complying with the various regulations. This and greater involvement of the Board’s Compensation committee. policy has now been fully rolled out. Compensation policy established pursuant to new “International Retail Key Resources” programme in regulations and market requirements Retail Banking In 2009, the fi nancial crisis highlighted the need for wide-reaching “International Retail Key Resources” (IRKR) are Retail Banking change to how variable compensations are paid to market professionals. employees with certain professional, behavioural (intercultural/ BNP Paribas intends to be a driving force behind this change to support managerial) and linguistic abilities, who are keen to pursue an sustainable growth in its activities by combining responsibility with international career and who can be posted on a short-term or competitiveness. The compensation policy has been amended to be 7 medium-term basis to a Retail Banking unit in another country immediately compliant with the European CRD III (*) directive and the for a specifi c assignment, project or managerial responsibility, or Decree of the French Ministry of the Economy and Finance published assigned to a multinational team in their own or another country. on 13 December 2010, once again refl ecting the Group’s conservative IRKRs are identifi ed from a total Retail Banking population of and rigorous approach to compensation. The Group intends to promote 146,000 employees in 54 countries. the need for consistency between the behaviour of employees whose professional activities are likely to have a material impact on the Bank’s At end-December 2010, 236 IRKRs of 24 nationalities had been risk profi le and the company’s long-term objectives, in particular with identifi ed in 27 countries, as well as 174 potential successors of regard to risks. The information for 2010 about members of the Executive 21 different nationalities in 28 countries. Management team and individuals whose professional activities have a Since 2009, a total of 96 IRKRs and potential successors have been material impact on the Bank’s risk profi le (information required to be posted under the programme, including 52 in 2010. made public by Article 43–2 of Regulation 97-02) will be available on the 65% of the total were international postings. 28% of the total BNP Paribas website, http://invest.bnpparibas.com/en, before the Annual were women. General Meeting on 11 May 2011.
(*) Capital Requirements Directive.
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New compensation practices for employees whose Entities controlled by the Fortis sub-group took part in the plan for the professional activities are likely to have a material fi rst time in 2010. Almost 180,000 employees in seventy-fi ve countries impact on the Bank’s risk profi le were eligible to purchase BNP Paribas shares via the Group Savings Plan (Plan Mondial) with a 20% discount. This policy has led to: In addition, under the annual Global Share Incentive Plan, managers ■ deferring a substantial portion of variable compensation over three may receive options and free shares subject to performance conditions. years and making payment of each annual deferred portion subject to the achievement of performance conditions, which, if not met, will At end-2010, Group employees owned 5.8% of the share capital directly result in non-payment or partial payment only; or indirectly. ■ indexing part of the variable compensation to BNP Paribas’ share value France in order to align the interests of benefi ciaries and of shareholders. In addition to fixed salary and compensation, the Group offers an The method used to determine individual variable compensation extensive range of benefi ts to improve the working environment and includes a quantitative and qualitative performance review of each work-life balance and to enable employees to fi nance their personal employee relative to the objectives set. This includes an assessment of projects and manage life’s risks, as well as preparing for retirement. each employee’s behaviour with respect to the Group’s values, ethics, team spirit and procedures and their contribution to controlling risks, Working hours particularly operational risk. The Group strives to cater to everyone’s particular needs through part- time work, annual leave, reduced working week, fl exitime, time savings accounts, etc. A RANGE OF BENEFITS REFLECTING A Life’s special events are also taken into account through extra leave for RESPONSIBLE APPROACH TO A LONG-TERM marriage, death, relocation, births, etc. EMPLOYMENT RELATIONSHIP Employee savings plans Employee share ownership The Group seeks to optimise collective profi t-based incentive schemes according to the legal, social and tax context of each entity: profi t-sharing For the past ten years, BNP Paribas has made every year a share capital (mandatory) and incentive (voluntary) plans in France to redistribute a increase reserved for Group employees giving them the opportunity portion of the profi ts they have contributed to through their work, as well to benefi t from the Group’s growth and to strengthen their sense of as similar profi t-sharing plans in many other territories. belonging to the Group.
Profi t-sharing and incentive plans BNP Paribas SA (amounts in euros) Amount payable in respect of year 2004 2005 2006 2007 2008 2009 2010 Total gross amount 148,701,874 186,076,788 227,719,000 232,530,560 84,879,969 181,349,984 235,833,607 Minimum amount per employee 2,945 3,772 4,696 4,728 1,738 3,782 4,627 Maximum amount per employee 10,020 10,689 12,732 12,800 4,641 10,128 12,447
Employee savings and pension plans Other company benefi ts 7 The Group provides employee savings plans, retirement savings plans The Group offers a range of benefi ts in addition to its legal obligations (PERCO) and supplementary pension plans to help employees build up providing a high level of protection for employees. These mechanisms their savings. have been harmonised, particularly outside France, with the aim of The employee savings plan is a collective scheme enabling employees to ensuring greater consistency between local systems that are sometimes build up a nest-egg, particularly for their retirement. In France, 15,000 quite disparate. Outside France, the Group seeks to provide company employees subscribe to the Group retirement savings plan (PERCO). Their benefi ts that cover medical consultations and hospital stays to its local employees and their families. savings become available at the date of departure for retirement, in the form of an annuity or a lump-sum payment. Top-up payments into the PERCO amounted to EUR 8.92 million in 2010.
352 2010 Registration document and fi nancial report - BNP PARIBAS SOCIAL AND ENVIRONMENTAL INFORMATION Human resources development 7
Italy Flexible, customised personal risk insurance in Since 2009, alongside the traditional variable compensation systems, BNL France has offered some of its employees ad hoc incentive measures designed BNP Paribas’ personal risk insurance plan was set up under a to reward them for excellent performance. For example, top-performing company-wide agreement and has few equivalents in French employees in the Retail, Private, Corporate, Debt Recovery and Origination companies. This fl exible plan offers staff a high level of cover for and Sales Assistance departments are offered to take part in the BNL absences from work due to illness, disability or death. Starting Masters programme. from a basic plan that applies automatically, employees can adjust BNL also offers all its employees a range of benefi ts such as health the protection to their personal or family situation by choosing insurance, accident insurance, additional personal risk insurance, benefi t amounts and supplementary cover as needed: higher subsidised loans, luncheon vouchers, a long-service award (after 25 benefi t for accidental death, education annuity, temporary income years of service), education grants, etc. for the spouse and a lump-sum payment in the event of the death of a spouse. Plan options can be modifi ed regularly. Luxembourg A “single status” for all BNP Paribas employees Bilan Social Individualisé (BSI) in Luxembourg In 2010, for the second consecutive year, almost 48,000 employees As part of the merger of BGL and BNP Paribas, a “single status” for all in France received a Bilan Social Individualisé, a statement that employees of both entities was introduced at end-2010 to ensure a shared provides a detailed breakdown of the monetary and non-monetary vision of their well-being by creating a common platform of benefi ts and components of the employee’s total compensation package. It by improving general working relationships: aims to provide an easy-to-grasp summary of the employee’s ■ work organisation: new working hours, redefi nition of reference periods personal situation, combining data which had previously only and the Time Savings Account, revision of paid leave and time in lieu, been available from a variety of sources. ability to purchase time in lieu and unpaid leave; ■ banking benefi ts: identical rates on mortgages and personal loans Belgium for everyone; ■ supplementary pension including the personal contribution and death Harmonisation of benefi ts for all BNP Paribas Fortis and disability insurance; employees ■ non-compulsory benefi ts (new health insurance, medical check-up, Following the integration in 2010 of BNP Paribas’ existing activities in caretaking service, childcare facilities, subsidised transport, etc.) Belgium prior to the acquisition of Fortis, employees of these entities were that enable to improve the general well-being and quality of life of transferred to BNP Paribas Fortis and as of their transfer benefi ted from employees. As a corollary to the Group’s ambitious business plan, the same compensation and benefi ts package as BNP Paribas Fortis. As all these support measures will help to promote inter-company a result, these employees are affi liated to the specifi c non-compulsory mobility in Luxembourg. There will be greater opportunities for career pension plans, the collective guaranteed income plans and health advancement and personal development within the new scope. insurance policies provided by BNP Paribas Fortis.
7
2010 Registration document and fi nancial report - BNP PARIBAS 353 SOCIAL AND ENVIRONMENTAL INFORMATION 7 Human resources development
LISTENING TO WHAT PEOPLE SAY
HIGH-QUALITY SOCIAL DIALOGUE Thanks to the trust established, a dozen collective bargaining agreements were concluded within BNP Paribas Fortis. A number of these agreements European Works Council were made necessary by the industrial master plan. Agreements covered areas such as working time reduction, job security and functional mobility New arrangements as well as the fi nancial status of employees of BNP Paribas’s Belgian As early as 1996, the Group set up a European Works Council before this branch following the transfer of its activity to BNP Paribas Fortis. became mandatory under law. The Council monitors Group developments Italy in Europe. The Council is chaired by the Chief Executive Officer of Social dialogue was fostered in 2010 and many meetings took place BNP Paribas. with the trade unions. They mainly covered implementation of the In 2009, the integration of the Fortis group’s European banking operations Human Resources Department’s three-year plan and how to manage gave BNP Paribas a new dimension and stronger footprint in several the overstaffi ng resulting from reorganisations of the Group’s various European countries. It was therefore necessary to revise the membership Italian operations. of the European Works Council, which had already been raised to twenty- Against this background, a general social plan was implemented fi ve members from sixteen countries after the integration of BNL in 2006. enabling a series of agreements to be signed, including an agreement The Group now has more than 162,000 employees in Europe, spread on reactivating voluntary recourse to the “solidarity fund for income, across a large number of countries, including the four domestic markets employment and professional retraining support for employees in the (France, Italy, Belgium and Luxembourg). banking industry”. Specifi c terms and conditions were defi ned for the After several months of negotiations, a further amendment was signed in more than 700 employees concerned. June 2010 by the fi ve French and two European trade unions. Lastly, in accordance with the Decree of January 2010, a company The European Works Council now has forty-nine staff representatives agreement was signed regarding health insurance, supplementing the from twenty countries. Its composition refl ects European diversity: it sick benefi ts offered to BNL employees. has ten offi cers who must represent at least six different countries, with Luxembourg a maximum of three representatives per country, and the Secretary and two deputy Secretaries must come from three different countries. The key area of focus for dialogue with employee representatives was the BGL integration plan, which was presented to employee representatives The new Council will now meet at least twice a year. It will have the and approved on 25 November 2009. resources it needs to operate properly. In addition, agreements were also signed with the Luxembourg Ministry Social dialogue at national level of Labour authorising the secondment of BGL BNP Paribas employees to BNP Paribas Luxembourg, as well as agreements with the four France largest trade union bodies in the fi nancial services sector extending the provisions of the 2009 banking collective bargaining agreement to 2010. In 2010, the Labour Rights Commission, BNP Paribas SA’s labour information and negotiation body, met twenty-one times and negotiated the signature of eight company-wide agreements. Some of these LISTENING TO EMPLOYEES THROUGH THE agreements were designed to improve and continue existing employee GLOBAL PEOPLE SURVEY 7 benefit plans and promote effective social dialogue, whilst others strengthen employee representation on various bodies. A global survey Two important profi t-sharing and incentive agreements were signed concerning almost all employees in France, confi rming the policy of In 2008, true to its tradition of “listening” to its employees, which as early the past few years aiming to give employees a stake in the Group’s as 1991 led to the introduction of social climate surveys, BNP Paribas performance. launched an annual global survey in partnership with Towers Watson, a global human resources consulting fi rm which analyses and processes In addition, a new amendment to the gender equality agreement was the data on a strictly anonymous and confi dential basis. also signed. The Global People Survey has become a key management tool to identify Lastly, BNP Paribas introduced various tools and schemes to prevent employee expectations, defi ne priorities and draw up action plans. stress in the workplace and signed an agreement with the trade unions in this area. The 2010 edition was conducted online, with: ■ Belgium a questionnaire available in 19 languages (adding Korean and Ukrainian to the 17 available in 2009); In recognition of their shared concerns for enterprise growth and in a ■ scope of application covering all continents (183,140 employees spirit of mutual respect, management and staff representatives pursued surveyed compared with 163,000 in 2009); an ongoing dialogue on labour relations issues in addition to formal meetings of representative bodies. ■ 52% response rate, up in almost all entities and countries;
354 2010 Registration document and fi nancial report - BNP PARIBAS SOCIAL AND ENVIRONMENTAL INFORMATION Human resources development 7
■ 78 questions, including two open-ended ones, covering 15 themes On behalf of the French Retail Banking business line, BNP Paribas SA’s (commitment, leadership, the working environment, local manager, occupational Health Department participated in a working group set objectives and assessments, training, careers, compensation, up to help to prevent and manage customer incivility and to assist and information and communications, operational effi ciency and cross- support customer-facing staff. functionality, competitive image and customer orientation, promoting diversity, ethics and social responsibility, managerial culture and the Public health issues integration of BNP Paribas and entities controlled by the Fortis group). BNP Paribas SA’s occupational health department has been working for many years to promote employee health. Results Public health initiatives taken in 2010 were:
Employees are very proud to belong to the Group. As in previous years, the ■ cardiovascular disease prevention programme, through screening for survey results reveal a strong commitment to the company, confi dence in risk factors such as high cholesterol, hypertension, smoking and stress; management’s strategic choices and their consistency with the Group’s ■ organising a cardiovascular disease prevention day run by a values. Employees believe that the Group is well positioned to meet future cardiologist, a smoking counsellor, a nutritionist and trainers in challenges. Most employees also have a very clear view of the objectives, life-saving techniques (defi brillator). whether the company’s, the business line’s or their own. Support for employees with long-term illnesses or A higher number of respondents than in 2009 said they appreciated incapacity for work BNP Paribas’ social and environmental initiatives and their comments provided a variety of suggestions that will be implemented on a As in the area of prevention of occupational hazards, the occupational day-to-day basis. Health Department, Human Resources managers and line managers work closely together to redeploy employees returning to work after several Corporate social and environmental responsibility, alongside leadership, months’ absence due to illness. Given the rapid pace of change within is now the most motivating factor for employees. Career prospects, the the Group, the reintegration process must factor in an adjustment to the third most motivating factor, was more important than in 2009. new circumstances, so as to dispel employees’ worries and allow them BNP Paribas Fortis employees have been included in the Global People the time to get back on their feet. Survey since 2009. In 2010, a growing number of them had a clear idea of their career opportunities within the Group, a positive sign of successful A medical observatory to monitor stress and mental integration. health issues (OMSAD) Stress is the second most prevalent occupational pathology after PROTECTING EMPLOYEES’ HEALTH musculoskeletal disorders. An observatory to monitor stress and mental health issues set up in collaboration with IFAS, the French The Group’s occupational health policy goes beyond simply complying institute for action on stress, in Paris and Lyons. At the beginning with changing legislative requirements. The major components of the of each periodic medical visit, employees fi ll out a confi dential, policy are risk prevention, taking account of public health issues and anonymous questionnaire that is immediately assessed by an support for employees who are at risk or who have become unfi t for work. occupational physician for purposes of a personal diagnosis. The data is then compiled and processed by IFAS, an independent France body, which returns the results to BNP Paribas. Results are used to measure stress levels, pinpoint populations at risk and take Preventing occupational hazards appropriate preventive measures. This system is now in place In 2010, particular emphasis was placed on the following areas: at BNP Paribas SA, BNP Paribas Personal Finance, BNP Paribas Assurance, BNP Paribas Leasing Solutions and Arval. In 2010, ■ updating the assessment of occupational hazards inherent in 7 15,864 people completed the questionnaire. the Group’s business operations (required by the Decree of 5 November 2001); ■ protecting against hearing problems for call centre employees; ■ listing approved information systems equipment; ■ continuing the programme to prevent and deal with psychosocial risks. Specifi c initiatives are pursued to prevent occupational hazards, including information campaigns, training, design ergonomics, remedial ergonomics and alert procedures. Medical assistance to employees that have been victims of attacks, in particular in the Paris region, is provided since 2001 in conjunction with the city’s emergency medical services. This initiative has been progressively reinforced in recent years, and its effects can be seen in the reductions in both the number and length of absences in the wake of attacks and in requests for transfer to another position after an attack.
2010 Registration document and fi nancial report - BNP PARIBAS 355 SOCIAL AND ENVIRONMENTAL INFORMATION 7 Human resources development
PERSONALISED SUPPORT FOR EMPLOYEES Stress, Information, and Support hotline This hotline has been operational since 1 December 2010. From France 8.15 am to 5 pm, a nurse or physician from the occupational health department in Paris is available to talk to employees The Social Action Department which comprises some thirty corporate wishing to obtain information about stress or who need help. social workers, takes measures and provides services for employees who The occupational health department may ask for support from have a private or professional problem, or who simply need advice and a physician specialising in stress, who will call the employee direction. back promptly. This support and information role is supplemented by guides on key issues in private life (maternity, paternity, adoption, childcare methods and employing a child carer, children in higher education, family carers, Belgium elderly parents, protection for adults, death in service of an employee, The integration of BNP Paribas with entities controlled by Fortis etc.). resulted in exchanges between the occupational health departments Many other issues may be also addressed including relationship at BNP Paribas SA and in Brussels, aiming to compare their respective diffi culties, the family, the household budget, sickness or disability. professional experience and share best practices. The Social Action Department fi lls the gap between private and working life and also offers employees close to retirement age information Ukraine sessions run by a specialised social worker on the financial and UkrSibbank employees who suffered radiation exposure after the psychosocial aspects of retirement. In 2010, almost 900 people took Chernobyl disaster qualify for benefi t payments and additional leave, part in these meetings. and their health is closely monitored as part of an initiative run by the Ukrainian authorities. Belgium The social team of 5 social workers works in the same spirit and Africa philosophy as the Social Action Department in France. In 2010, 900 BNP Paribas is an active member of Sida Entreprises, an association people with personal or professional problems obtained help and support bringing together leading French investors in Africa whose aim is to help in areas such as separation, death, overindebtedness or professional resolve ongoing problems in the areas of AIDS prevention and access to uncertainties, etc. treatments. These diffi culties persist despite the fi nancial aid provided In close collaboration with the Medical Department, the social workers to affected countries. BNP Paribas helps to set up inter-company groups keep in contact with employees who are unable to work in order to in the West African countries where it is present, through its network of smooth their return to work at the appropriate time. associated banks (BICI). They took part in various initiatives: Diversity Project, monitoring employees with disabilities, promoting psychosocial well-being, etc. BNP Paribas Oslo for a quality working environment The social workers also deal with cases of moral or sexual harassment In October 2010, the HR team in Norway in association with at work. the occupational Health Department organised a seminar on “balanced lifestyle”. Employees enjoyed massages and cookery They form part of the initial support team in the event of armed bank classes and took part in cardio-pulmonary resuscitation training robberies or any other traumatic event in order to provide victims with 7 and stress management exercises. psychological support.
Risk prevention campaign in Spain The HR Department, in association with the Health & Safety committee, employee representatives, the Medical Department and Communications Department, launched a campaign to raise awareness of and prevent occupational hazards. As part of the World Day for Health and Safety at Work on 28 April 2010, advice on workstation ergonomics was posted on the Intranet: positioning of chair, keyboard and mouse, height of computer screen, handling electrical equipment and sockets, eye protection, etc.
356 2010 Registration document and fi nancial report - BNP PARIBAS SOCIAL AND ENVIRONMENTAL INFORMATION NRE Appendices – Social chapter 7
7.2. NRE Appendices – Social chapter
NRE indicator - 2010 year Scope for 2010 1. Compensation and benefi ts paid to each corporate offi cer during the financial year See section 2 of the Registration Document on Corporate governance. Group 2. Compensation and benefi ts received from controlled companies during the fi nancial year by each corporate offi cer within the meaning of Article L.233-13 of the French Commercial Code See section 2 of the Registration Document entitled Corporate governance. Group 3. List of all Directorships and positions held during the fi nancial year in any company by each of the corporate offi cers See section 2 of the Registration Document entitled Corporate governance. Group 4. Total number of employees including employees on fi xed-term contracts See section of the Registration Document entitled Workforce evolution. At end-2010, the Group had 205,348 full-time equivalent (FTE) employees, an increase of 2,256 compared with 2009. In addition, there was a further difference of 1,352 FTEs due to employees on fi xed-term contracts of less than six months (included in workforce fi gures from 2010) and scope effects. FTE fi gures are measured pro rata to working hours. The FTE workforce measures count active employees and employees on paid absences who are on permanent or fi xed-term contracts. Interns, apprentices, Volunteers for International Experience, subcontractors and temporary staff are not counted. Group At end-2010, the Group managed a workforce of 65,357 FTEs in France, including 2,099 fi xed-term contracts. France The concept of cadre as used in a French work environment, loosely translated as “executive” or “manager”, cannot be transposed as such to worldwide operations. For information purposes only, the ratio of “cadres” (executive or managerial employees) to all employees of BNP Paribas SA has varied as follows since 2002: ■ 35.7% in 2002; ■ 37.7% in 2003; ■ 39.7% in 2004; ■ 42.4% in 2005; ■ 44.6% in 2006; ■ 47.4% in 2007; ■ 47.3% in 2008; ■ 49.0% in 2009; ■ 51.1% in 2010. As from 2008, this indicator was based on the total workforce (including employees on unpaid absences and young people BNP Paribas SA in employed under work-study contracts). mainland France 5. Number of new permanent and fi xed-term contract employees In the year to 31 December 2010, the total number of persons hired under permanent contracts worldwide was 24,559, 7 of which 53.1% were women. Group The Group hired 3,852 employees on permanent contracts in France in 2010. See section of the Registration Document entitled A Group on the recruitment trail. France 6. Recruitment diffi culties, if any The attractiveness of the BNP Paribas Group as an employer remains very high, with 191,000 unsolicited job applications received (versus 170,000 in 2009). In 2010, new hires continued to be evenly split between young graduates with less than 2 years’ work experience (45%) and employees with more than 2 years’ work experience (55%). See section of the Registration Document entitled A Group on the recruitment trail. France 7. Number of and reasons for dismissals In 2010 the total number of employees dismissed by the Group was 4,897. Group In France, the number was 410. The main reasons for dismissals remain professional incompetence, inaptitude and misdeeds. France 8. Overtime hours BNP Paribas SA in In 2010 BNP Paribas SA in mainland France paid 83,823 hours of overtime. mainland France
2010 Registration document and fi nancial report - BNP PARIBAS 357 SOCIAL AND ENVIRONMENTAL INFORMATION 7 NRE Appendices – Social chapter
NRE indicator - 2010 year Scope for 2010 9. External workforce Temporary staff: In 2010, the monthly average number of temporary staff for the Group in France was 1,124 FTEs France In 2010, the monthly average number of temporary staff for BNP Paribas SA in mainland France was 510. BNP Paribas SA in The average contract length was 32 days. mainland France Service providers: BNP Paribas SA in At end-December 2010, the number of employees belonging to an external company was 4,093 (in equivalent man months). mainland France The agreements between BNP Paribas and temporary staffi ng agencies and service providers include very strict clauses BNP Paribas SA in on compliance with labour laws. mainland France 10. If applicable, information relating to headcount adjustments, redeployment and career support advice BNP Paribas SA in See section of the Registration Document entitled Long-term employment management. mainland France 11. Working hours Extensive possibilities for requesting part-time work arrangements are available to employees. A total of 10.4% of employees at BNP Paribas SA in mainland France have opted for part-time work arrangements. After one year of service, employees are eligible for a working time savings account in which leave days can be accumulated. Leave days saved in this account can be taken in various forms (personal convenience leaves, co-investment in training, fi nancing a shift to part-time). In 2010, 19,885 employees had a working time savings account. With the agreement of their manager, employees can also take 5 to 20 days of unpaid leave. BNP Paribas SA in See the Social audit. mainland France A total of 9.4% of employees in France have opted for part-time work arrangements. France 12. Working hours and days for full-time employees In France, the average working week for a full-time employee is generally 35 hours. At BNP Paribas SA, the theoretical BNP Paribas SA in number of days worked per employee per year (on a fi xed working hours basis) was 206 in 2010. mainland France 13. Working week for part-time employees For the Group in France, 94.2% of employees who have opted to work part time are women. The most common arrangements are to work 50%, 60% or 80% of full time. 79% of part-time employees have opted to work at 80% or more of full time. France For BNP Paribas SA in mainland France, 93.7% of employees who have opted to work part time are women. BNP Paribas SA in 73.6% of part-time employees have opted to work at 80% or more of full time. mainland France 14. Absenteeism and reasons for absenteeism The absenteeism rate in 2010 relating to paid absence was 6.1%, including 2.1% for maternity leave. France 7 15. Compensation For the Group in France: ■ average annual compensation (fi xed and variable) was EUR 48,148; ■ 88.5% of employees received variable compensation (87.3% of women and 90% of men); ■ 46.6% were awarded an increase in fi xed compensation (versus 43.2% in 2009). See section of the Registration Document entitled A competitive compensation policy in line with international rules. France The average monthly compensation of BNP Paribas SA employees in mainland France was EUR 3,389 in 2010 (versus EUR 3,255 in 2009). BNP Paribas SA in 13.8% of employees received a promotion. mainland France
358 2010 Registration document and fi nancial report - BNP PARIBAS SOCIAL AND ENVIRONMENTAL INFORMATION NRE Appendices – Social chapter 7
NRE indicator - 2010 year Scope for 2010 16. Changes in Compensation The annual wage bargaining round in 2010 for pay in 2011 led to an agreement signed by three of the fi ve labour unions. These three bodies represented 51.9% of the votes cast at the last election for employee representatives. The agreement included: ■ a permanent salary increase: allocation of EUR 500 to employees whose gross annual base salary is less than or equal to EUR 30,000 and EUR 450 for employees whose gross annual fi xed salary is more than EUR 30,000 and less than or equal to EUR 75,000; BNP Paribas SA in ■ setting of a minimum fi xed salary for managers aged fifty plus. mainland France 17. Payroll expenses The Group’s social security charges for 2010 totalled EUR 3,234 million. Group 18. Application of the provisions of Title IV, Book IV of the French Labour Code (incentive and profi t-sharing plans, employee savings plans) See section of the Registration Document entitled A range of benefi ts refl ecting a responsible view of a long-term working relationship. In 2010, profi t-sharing and incentive amounts accruing to employees of BNP Paribas SA amounted to EUR 235.9 million, or a minimum of EUR 4,627 and a maximum of EUR 12,447 per employee (on a full-time employee basis). BNP Paribas SA The amount of shares subscribed within the framework of the 2010 share capital increase reserved for Group’s employees was EUR 155.4 million, with an overall participation rate of 31%. The participation rate in each geographical area was as follows: ■ France: 51%; ■ Asia: 42%; ■ Oceania: 25%; ■ Middle-East: 21%; ■ North America: 18%; ■ Europe (excluding France): 15%; ■ Latin America: 11%; ■ Africa: 6%. The geographical breakdown of staff outside France who took part in the plan was as follows: ■ Europe (excluding France): 69.6%; ■ Asia: 17.9%; ■ North America: 4.2%; ■ Latin America: 3%; ■ Africa: 2.9%; ■ Oceania: 1.4%; ■ Middle-East: 1.0%. Group
7
2010 Registration document and fi nancial report - BNP PARIBAS 359 SOCIAL AND ENVIRONMENTAL INFORMATION 7 NRE Appendices – Social chapter
NRE indicator - 2010 year Scope for 2010 19. Gender equality in the workplace See section of the Registration Document entitled Promoting diversity. 53.9% of BNP Paribas employees worldwide are women (based on physical headcount). Group The physical headcount of the Group in France comprises 44.1% of men and 55.9% of women. The proportion of female executives has continued to rise: ■ 43.4% in 2009; ■ 43.9% in 2010. France At end-2010, BNP Paribas SA’s physical staff in mainland France is composed of 19,057 men and 25,388 women (versus 18,479 and 24,391 respectively at end-2009). The Company agreement of 9 April 2004 on gender equality was amended in 2005 and 2006 and then replaced by the agreement of 30 July 2007. This agreement sets down the principles that should be followed in observing and developing equal opportunity and treatment between men and women at all stages of professional life. The agreement was amended in July 2010 with new ambitious commitments including the appointment of a Gender Equality Offi cer. The Group thus provides a system for reviewing individual cases where employees believe they are being discriminated against. The proportion of female executives has continued to rise: ■ 34.2% in 2001; ■ 35.7% in 2002; ■ 36.9% in 2003; ■ 37.7% in 2004; ■ 38.8% in 2005; ■ 40.3% in 2006; ■ 41.4% in 2007; ■ 43.1% in 2008; ■ 44.0% in 2009; ■ 44.6% in 2010. The proportion of female executives receiving promotion has varied as follows: ■ 54.7% in 2002; ■ 55.6% in 2003; ■ 55.8% in 2004; ■ 57.1% in 2005; ■ 58.1% in 2006; ■ 58% in 2007; ■ 59% in 2008; ■ 59.6% in 2009; BNP Paribas SA in ■ 60.6% in 2010. mainland France In 2010, at BNP Paribas in France, 39% of appointments to management positions (as defi ned in the banking industry collective agreement) and executive management positions (for subsidiaries not governed by that agreement) were women, The Group in compared with 38% in 2009, 32% in 2008 and 28.5% in 2007. France 7 20. Employee relations and collective bargaining See section of the Registration Document entitled High-quality social dialogue. As in previous years, there was constructive dialogue with employee representatives within BNP Paribas SA in 2010. The Commission on Employment Law, BNP Paribas SA’s labour negotiation body, met on 21 occasions, BNP Paribas SA in and 8 new agreements were signed with trade unions. mainland France
360 2010 Registration document and fi nancial report - BNP PARIBAS SOCIAL AND ENVIRONMENTAL INFORMATION NRE Appendices – Social chapter 7
NRE indicator - 2010 year Scope for 2010 21. Health and safety See section of the Registration Document entitled Protecting employees’ health.
■ Medical assistance to employees who were victims of attacks In 2010, 20 employees received medical assistance after an attack. Three of them were referred to specialists for psychological help. ■ Training for medical staff and refresher courses for fi rst-aid workers ■ Training in life-saving techniques for nurses, run by a company doctor: 26 nurses trained. ■ Training organised by SAMU 92 (French emergency services) for nurses: 10 nurses trained. ■ Training for fi rst-aiders in the workplace, run by 2 doctors and 1 nurse from the Occupational Health Department: 187 on initial training and 602 on refresher courses. ■ Prevention and management of psychosocial risks ■ Medical observatory for monitoring stress, anxiety and depression (OMSAD): in 2010, 15,864 employees completed the questionnaire designed to identify employees at risk. ■ Psychological support service: 16 cases handled. ■ Stress, Information and Support hotline for employees: 3 calls received since the service was introduced on 1 December 2010. ■ Consultation service introduced in September 2010 enabling employees with psychological troubles to consult an external physician, on the referral of the company doctor: 47 appointments made in 2010. ■ Incivility in bank branches: identifying uncivil behaviour and training the employees concerned (2,853 employees trained in French Retail Banking). ■ Other preventive actions ■ Prevention of cardiovascular disease forum organised in December for employees: 100 people registered in workshops on life-saving techniques and 165 blood tests carried out. ■ Infl uenza vaccination campaign: 2,111 vaccinations. ■ Programme for continued employment of seniors: 2,281 annual medical visits for employees aged 55 and over (Paris, Paris region and Lyons). ■ Musculoskeletal disorders: movement and posture training run by a nurse: 55 people trained in 2010. ■ Hearing: detecting hearing problems for employees working in call centres, with 4,283 tests carried out in 2010. ■ Workstation ergonomics: 5 plan studies, 108 premises inspections and 11 workstation assessments conducted in 2010. ■ Colorectal cancer screening with the Hemocult test offered to employees aged 50 plus. ■ Screening for glaucoma and diabetes BNP Paribas SA in ■ 1,218 people took part in the blood donation drive. mainland France 22. Training See section of Registration Document entitled Sustained efforts in skills development. For the 2009-2010 academic year, the number of people in BNP Paribas SA in mainland France enrolled on training courses leading to a recognised qualifi cation was 245 for Brevet Professionnel banking diploma; 355 for the BTS banking diploma and 224 for the Institut Technique de Banque diploma. For the 2010-2011 academic year, the number of people in BNP Paribas SA in mainland France enrolled on training courses leading to a recognised qualifi cation was 265 for Brevet Professionnel banking diploma; 396 for the BTS banking diploma and 219 for the Institut Technique de Banque diploma. In 2010, 9,042 employees of BNP Paris SA in mainland France applied for training under the DIF (Individual right 7 to training) scheme. BNP Paribas SA in The average number of training hours per employee was 33.7. mainland France
2010 Registration document and fi nancial report - BNP PARIBAS 361 SOCIAL AND ENVIRONMENTAL INFORMATION 7 NRE Appendices – Social chapter
NRE indicator - 2010 year Scope for 2010 23. Employment and integration of persons with disabilities See section of the Registration Document entitled Promoting diversity. At end-2010: ■ BNP Paribas SA employed 893 people with disabilities (versus 850 in 2009, 754 in 2008 and 730 in 2007) and recruited 48 in 2010 (41 in 2009); ■ the number of benefi ciary (handicap-equivalent) units (BU) was 1,044 and the number of additional units generated by work outsourced to ESATs (support through work organisations) was 22, making a total of 1,066 BUs versus 1,021 in 2009. ■ 87 employees with disabilities benefi ted from employment continuation measures. An agreement on employment and inclusion of persons with disabilities was signed in 2008. This agreement is part of BNP Paribas’ overall non-discrimination and diversity initiative, and it follows up on commitments made by the Group when the Diversity Charter was signed in 2004. This agreement expresses all parties’ desire to see BNP Paribas implement a proactive long-term policy in favour of the employment and inclusion of persons with disabilities. It calls for actions in four areas: ■ develop a recruitment plan for persons with disabilities in the ordinary work environment; ■ improve conditions for bringing persons with disabilities into jobs by offering appropriate working conditions, access to professional training and technological accommodations; ■ seek out stronger partnerships with the sheltered work sector; ■ an ongoing focus on key considerations for maintaining persons with disabilities in employment. The Group keeps an active list of organisations in the sheltered work sector so that subcontractors of Group entities can be BNP Paribas SA in referred to and encouraged to call on such organisations. mainland France 24. Social and cultural activities Social and cultural activities that are national in scope are managed by the Central Works Council. Local service activities are managed by local works councils. Services include children’s summer camps and organised holidays for staff, contributions to meal expenses, family welfare, lending libraries for books, records, videos and other media, and discounts for theatres and cinemas. A sports and cultural group gives employees the opportunity to take part in a variety of team sports and cultural activities. A breakdown of BNP Paribas SA’s contributions to cultural and social activities is provided in the Company’s Social audit. BNP Paribas SA in The 2010 budget for social and cultural activities was estimated EUR 93.55 million (versus EUR 93 million in 2009). mainland France
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362 2010 Registration document and fi nancial report - BNP PARIBAS SOCIAL AND ENVIRONMENTAL INFORMATION NRE Appendices – Social chapter 7
NRE indicator - 2010 year Scope for 2010 25. Relations with the community, including associations to combat social exclusion, educational institutions, environmental and consumer associations, and local residents Over the years, BNP Paribas SA’s local banking network in France has been involved in more than 1,500 formal or informal voluntary partnerships with various organisations. Through relationships with more than 1,000 further education institutes, the Group offers internships, apprenticeships and work experience for young people. It has developed 500 partnerships designed to promote the sporting, cultural and artistic initiatives of young people, as well as local projects to help integrate them into the labour force, combat social exclusion and preserve the environment. Projet Banlieues: Through Projet Banlieues, launched in December 2005, the BNP Paribas Foundation offers its support to ADIE (a non-profi t association providing microcredit to the unemployed) to foster business development in disadvantaged neighbourhoods through several initiatives: ■ job creation and business formation: in fi ve years, the project has fi nanced the opening of ten lending centres throughout France. In 2010, 968 micro-loans were granted by these centres, fi nancing almost 647 business start-ups; ■ tutoring and coaching: In partnership with Afev, close to 1,400 school children living in disadvantaged neighbourhoods received educational assistance thanks to the efforts of 1,000 additional student volunteers; ■ support for community projects: The Foundation provided help in 2010 to 69 ongoing and new community projects. Projects focus mainly on education, professional inclusion, social inclusion through culture and sport, and training initiatives. Odyssée Jeunes: Launched in December 2009 by the BNP Paribas Foundation in partnership with the Seine-Saint-Denis departmental authorities, this programme helps to fi nance school trips organised by secondary schools in the district, with 202 projects completed in one year. Grants allocated to the programme fi nanced more than half the cost of these trips, signifi cantly reducing the fi nancial contribution made by the families. All in all, more than 8,400 pupils from 108 secondary schools of the 144 in the district have benefi ted from the programme. The purpose of these trips is to learn the language or history of another country by addressing the concepts of sustainable development or citizenship, and to discover other cultures. Employee Helping Hand projects: In 2010, through this programme, the BNP Paribas Foundation supported 70 projects run by general interest associations, mainly in the areas of humanitarian aid, community support, outreach, health and disability. ESJ Bondy: The BNP Paribas Foundation supports the “Equal opportunity” foundation course run by the ESJ Lille’s school in Bondy. The course enables twenty students, of underprivileged families, with three years of higher education to prepare for the entry exams for the major journalism schools. Bondy Blog: Bondy Blog helps young people from diffi cult neighbourhoods involved in associations to learn how to use blogs (written, radio and video) by training them in editorial and information dissemination techniques. Consumer associations: The Quality & Consumer Relations Department of the French Retail Banking Division has forged partnerships with around ten consumer advocacy groups. Mediation of banking disputes: BNP Paribas is one of the few fi nancial institutions to have committed since 2003 to follow the recommendations and opinions of the ombudsman in any and all cases. As from March 2009, in response to the needs of its small business customers, BNP Paribas decided to introduce a separate mediation procedure and ombudsman for small business owners with the same role and responsibilities as the retail banking ombudsman appointed in 2001. In 2010, the role of these ombudsmen was extended and through their reports they contributed to driving the Bank forward by settling an increasing number of disputes on an equitable basis. Links with educational institutions: ■ The Group’s very active ‘campus management’ policy, with over 100 events organised at educational institutions in 2010, increased the fl ow of applicants for pre-recruitment (internships, VIE, work-study) to nearly 65,000 candidates; ■ Under partnership agreements or as part of specifi c projects, groups of BNP Paribas branch offi ces maintain very close 7 relationships with the associations and educational institutions in their catchment areas. These partnerships generally extend beyond purely commercial relationships, offering fi nancial, technical or even organisational support for projects undertaken by partners. ■ BNP Paribas awarded EUR 850,000 in grants to schools located in underprivileged urban areas as payment of the apprenticeship tax in France. These funds were used for the purchase, hire and upkeep of teaching and professional equipments and facilities. France
2010 Registration document and fi nancial report - BNP PARIBAS 363 SOCIAL AND ENVIRONMENTAL INFORMATION 7 NRE Appendices – Social chapter
NRE indicator - 2010 year Scope for 2010 26. Contribution to regional development and employment In September 2009, to allay fears about the credit crunch and meet the needs of small businesses and sole proprietors, French Retail Banking set up special arrangements with the goal of fi nancing 40,000 projects representing at least EUR 5 billion by end-2010. This target was achieved three months ahead of schedule with 49,881 projects totalling EUR 6 billion fi nanced by the year end. This performance refl ects the strong efforts made by the branch network teams and the Bank’s desire to help overcome the crisis by supporting its clients in their projects despite the diffi cult economic environment. To meet the expectations of business clients, BNP Paribas decided to house all its commercial teams dedicated to entrepreneurs and small businesses under one roof. The Maison des Entrepreneurs project is an unprecedented concept, designed to help entrepreneurs and small businesses to manage their wealth planning and business lifecycle projects. This approach illustrates BNP Paribas’ strong commitment to this segment of the economy. France In the international markets, BNP Paribas also contributes to the fi nancing and development of local economies in countries where it has a retail banking operations. In Belgium, BNP Paribas Fortis launched a project to provide EUR 1 billion in investment loans to Belgian business owners in 2009. In 2010, this operation was followed by the granting of 75,000 business loans to fi nance the needs of small businesses and entrepreneurs. The European Investment Bank (EIB) and BNP Paribas Fortis also signed a new partnership agreement creating a pool of EUR 150 million for lending to small businesses in Belgium. All in all, more than 500 businesses across all sectors, services and industries benefi ted from this fund on very attractive terms and conditions. Following an initial campaign in 2009, the BNP Paribas Fortis branches passed on the EIB funds in the form of loans to small businesses to support their investment projects. In Italy, BNL and its subsidiary Artigiancassa which specialises in fi nancing tradesmen at preferential rates through public funds, won the bid launched by the Lombardy regional authorities and Finlombarda SpA for the Made in Lombardy project. This project aims to strengthen the competitiveness of Lombardy based businesses and encourage innovation. Through Made in Lombardy, EUR 500 million of loans have been granted including EUR 400 million by BNL and Artigiancassa. Lastly, on 3 December 2010, BNL signed an agreement with the European Investment Bank for a EUR 300 million loan designed to fi nance small business projects at preferential rates to foster economic and social development. For the rstfi time, these loans were available to the retail branch network’s business clients. In Morocco, Banque Marocaine pour le Commerce et l’Industrie (BMCI), a BNP Paribas subsidiary, promoted access to lending for small businesses by signing a master agreement on 28 April 2010 for the installation of rating platforms to facilitate small business fi nancing. This agreement enables the Bank’s small business clients to submit their applications to the Imtiaz and Moussanda programmes. The Imtiaz programme supports fast-growing businesses with a strong business plan but low borrowing capacity. The Moussanda programme aims to improve productivity by accelerating the use of information technology. Group 27. Outsourcing and the Bank’s policy with subcontractors: steps to ensure that subcontractors comply with International Labour Organization (ILO) standards Under the Group’s purchasing policy, all contracts signed by the Group’s French and international entities must include specifi c contractual provisions relating to compliance with social practices. These provisions, whether they are standard clauses recommended by the Group or clauses proposed by the suppliers themselves, must include the obligation to comply not only with the labour law applicable in the country concerned but also with fundamental International Labour 7 Organization (ILO) standards and particularly those on minimum age, child labour, the right of association, collective bargaining, forced or compulsory labour, gender equality, non-discrimination, working hours and minimum wages. In accepting these provisions, suppliers undertake to implement their social policy in all countries where they operate and to require the same of their own sub-contractors. In the same vein, at the end of 2009 the Purchasing Department launched a project designed to tighten up the CSR criteria in its supplier selection process. As of mid-2010, most tender invitations include questions about the candidate’s equal opportunity and non-discrimination policy (disability, equality, age diversity, diversity of origin, etc.). The answers to the questionnaire have a direct bearing on the ultimate selection of suppliers. Lastly, the Group’s internal control system requires the operational or permanent control teams to monitor compliance with these contractual undertakings. Group
364 2010 Registration document and fi nancial report - BNP PARIBAS SOCIAL AND ENVIRONMENTAL INFORMATION NRE Appendices – Social chapter 7
NRE indicator - 2010 year Scope for 2010 28. Steps taken by the Bank to ensure that subsidiaries comply with ILO standards In addition to the management controls required by the Group’s internal control system, internal audit and inspection teams are responsible for verifying compliance with directives. In 2008 the Group’s CSR audit methodology was overhauled: the reference documents and methodology guides were updated to take more systematic account of the problems and issues that Group entities encounter in France and other territories. A whistleblower hotline enables employees to report any compliance risks they may encounter. Group 29. Steps taken by foreign subsidiaries to address the impact of their business on regional development and local communities All Group subsidiaries are part of a division and must contribute to fulfi lling its strategy, implementing its policies and exercising its social responsibility. The levels of remuneration provided by BNP Paribas to employees, particularly in emerging nations, and benefi ts such as health insurance and death/disability coverage, help raise standards of living for employees’ families and communities. The Group makes limited use of expatriate staff, giving local staff the opportunity to take up managerial functions and other positions of responsibility. Group
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2010 Registration document and fi nancial report - BNP PARIBAS 365 SOCIAL AND ENVIRONMENTAL INFORMATION 7 NRE Appendices – Environmental chapter
7.3. NRE Appendices – Environmental chapter
NRE indicator - 2010 year Scope The Group fi gures provided below have been extrapolated from the data compiled from the reporting scope, i.e. 17 countries representing 82.9% of the total 205,348 full-time equivalents (FTEs) managed by the Group at 31 December 2010. Only the normal consumption data (e.g., consumption of energy, water, paper, and other supplies) have been extrapolated; data related to sustainability initiatives (renewable energy, responsible paper, waste recycling, etc.) have not been extrapolated since the Group does not assume that such measures have been implemented in the countries not included in the survey. 1. Water consumption The Group’s total water consumption was 4.57 million m3. Average water consumption per FTE was 22.3 m3. Actual water consumption levels vary substantially from country to country, refl ecting conditions in each geographical area and variations in water systems. Several entities have set up water economy systems or rainwater recovery systems for non-food use, in particular in regions of the world where water sources are scarcer than in others, or where there exists a particular sensitivity to the matter. 2. Raw material consumption The Group consumes raw materials through its purchases of real estate, furniture and furnishings, offi ce equipment, IT equipment, etc., which form part of a continuous optimisation approach. Green purchases (products with an environmental label) represented 10.6% of the Group’s total purchases of offi ce supplies. Paper policy: the Group consumed 47,715 tonnes of paper in 2010, i.e. 232 kg per FTE. This includes boxes of paper, paper rolls used at printing centres, envelopes and paper purchased by printers for BNP Paribas jobs. Responsible paper (more than 50% recycled or carrying the FSC or PEFC label) represented 22.8% of total paper purchases. A “consume less, consume better” paper policy aiming to signifi cantly reduce consumption and improve the environmental performance of paper purchased is currently being drawn up at Group level. 3. Energy consumption To heat and light its buildings and power its equipment (PC, Data Centres, printing, telephony, other), the Group consumed 2,039 GWh (or 264 kWh/m²) in 2010, comprising 74.1% in electricity, 16.1% in natural gas, 3.7% in fuel oil, 3.9% in urban heating and the remainder in urban cooling and renewable heat generated and consumed on site. Business travel is another major source of energy consumption, amounting to 984 million km (or 4,794 km per FTE) in 2010 comprising 63.3% in air travel (of which 41.9% in economy class), 24.5% in car travel and 12.2% in train travel. 4. Measures taken to improve energy The Group has a policy on energy effi ciency in its offi ces, both through responsible lighting (low effi ciency consumption lighting in some buildings in Italy, Spain and the United Kingdom, lighting control systems in the USA covering more than 3,000 people, etc.) and through effi cient heating systems 7 such as the initiative in Saran (ASO France), where a cogeneration plant has been installed to extract value from the heat generated by producing electricity for the local electricity grid. The heat is recovered and meets 30% of the site’s annual heating needs. Again in France, electricity consumption at renovated FRB branches has decreased by 10% since 2009 thanks to a change in the lighting times of illuminated signs, the installation of more effi cient equipment and high quality maintenance of technical plant. In 2010 the Group signed the WBCSD (World Business Council for Sustainable Development) Manifesto for Energy Effi ciency in Buildings, committing it to a global approach throughout all its premises. In parallel, the Group endeavours to reduce the consumption of information systems: integration of signifi cant energy criteria in its tender invitations for PCs and screens, implementation of NightWatchman power saving software to reduce PC energy consumption, ISO 14001 certifi cation of BNP Paribas Partners for Innovation (BP2I) which manages all BNP Paribas’ Data Centres in France and the vast majority of its workstations.
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NRE indicator - 2010 year 5. Use of renewable energy sources Renewable energy represented 11.1% of the Group’s total energy consumption in its buildings (i.e. excluding transport). Renewable electricity (kWh with a “green certifi cate”, i.e. a contract certifying that a specifi ed amount of green electricity has been allocated “virtually” to the consumer) represented 14.6% of total electricity purchases. Renewable heat represented 4.0% of urban heating purchases. Meanwhile, some of the Group’s premises produce renewable electricity (mainly through solar panels) such as Arval Italy in Scandicci, which produced more than 8 MWh in 2010. This electricity is not usually consumed on site but sold to the local grid. 6. Land use For real estate development projects on behalf of its clients, BNP Paribas Real Estate hires a specialised consulting fi rm to conduct a diagnostic review of the extent of soil contamination. A soil identifi cation programme is developed, contamination studies are performed using tests and analyses, and a soil report is drawn up. BNP Paribas Real Estate uses the fi ndings of the contamination evaluation to perform any remediation work necessary to ensure that soil meets applicable regulatory requirements. 7. Emissions into air, water and soil Greenhouse gas emissions are carefully measured by converting the energy consumption in the buildings (heating, air conditioning, lighting, IT power supply) and in employee business
travel (plane, train, car) into tonnes of CO2 equivalent (t CO2-e, including all six greenhouse gases covered by the Kyoto protocol).
On this basis, the Group’s emissions in 2010 amounted to 701,827 t CO2-e (i.e. 3.42 t CO2-e per FTE) comprising 76.3% in its buildings and 23.7% in business travel. In 2010, BNP Paribas joined the Carbon Disclosure Leadership Index France, a Carbon Disclosure Project initiative, which refl ects the quality of the Group’s carbon reporting. Air and soil pollution is not signifi cant for a services group like BNP Paribas. 8. Noise and odour pollution No legal complaints relating to noise or odour issues were fi led against the Group in 2010. BNP Paribas Real Estate consistently seeks to limit the environmental impact of its property development schemes in terms of noise and odour pollution and engages in dialogue with community residents. Insofar as building infrastructures can be a source of noise pollution, the Company selects machines offering the best available acoustic performance. Specifi c tests are performed upon completion of construction and, if required, additional measures are taken to comply with applicable noise regulations. Locations of air intake and discharge vents are chosen with regard to neighbouring buildings and dominant wind patterns. Choices concerning building methods, construction machinery and the manner in which construction waste is managed are made with the objective of minimising the impact of building work on the immediate environment. 9. Waste processing The Group generated 37,662 tonnes of waste in 2010 (excluding offi ce furniture), i.e. 183 kg per FTE. The percentage of waste recycled or processed for re-use was 27.7%. Paper waste amounted to 123 kg per FTE. Paper sorting and collection for recycling is practised as a general principle throughout the branches and head offi ce buildings in France and Belgium (CrocFeuilles and similar programmes in France: 2,103 sites affecting 17,432 employees, 10,382 containers installed and 2,315 tonnes of paper recycled in 2010). Regarding the recycling of lighting fi xtures, aluminium sockets and the glass from uorescentfl light 7 bulbs used in most offi ces in France are also recycled and the gas is reprocessed. 10. Measures taken to avoid The direct impacts of banking activities on the biological balance mainly come from energy disruption to the biological balance consumption and the resulting greenhouse gas emissions, and the consumption of raw materials. The Group therefore focuses on controlling its energy consumption and on its “consume less, consume better” paper policy, as described above, to reduce its impact on the biological balance.
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NRE indicator - 2010 year 11. Measures taken to ensure The Group Compliance Function, whose Head sits on the Executive Committee and of which compliance with legal requirements the CSR Delegation is part, has a broad role and wide powers in coordinating the Group’s internal control system. Group Compliance circulates Group-level directives regarding permanent internal control and monitors the functioning of the Internal Control framework in the Group’s entities. Compliance with CSR regulatory requirements forms an integral part of this internal process. The Group actively monitors developments in environmental regulations and includes them immediately in its procedures and directives. Several enforcement Decrees arising from the Grenelle II law in France are due to come into effect in 2011, which could change how the Group manages its CSR reporting. In anticipation of these changes, the Group has updated its Environmental reporting Protocol, implemented a Greenhouse Gas Accounting Protocol and begun to roll out a specialist application dedicated to environmental reporting. This approach also applies to the Group’s suppliers notably by systematically including a questionnaire on their corporate social and environmental responsibility policy in tender invitations sent out by the Group Procurement department (ARF) through the online e-Sourcing platform. 12. Steps taken towards environmental The following entities were ISO 14001 certifi ed at 31 December 2010: evaluation and certifi cation ■ 1,463 branches in France under the Welcome & Service programme; ■ BNP Paribas Editique in France; ■ BP2I in France, which encompasses the three main Data Centres in France and the workstations under its management; ■ BNP Paribas Factor in France; ■ Personal Finance Automobile Business in France; ■ BNP Paribas Real Estate in the United Kingdom; ■ Arval in the United Kingdom; ■ Arval in Italy; ■ Türk Ekonomi Bankasi (TEB) in Turkey. These entities represent 11,880 employees. Other entities have already committed to an ISO 14001 certifi cation approach in 2011. 13. Expenditures incurred to prevent Suppliers are required to complete a CSR questionnaire when responding to tender invitations sent environmental consequences out by the Group Procurement department (ARF). This questionnaire accounts for at least 5% of business activity of the overall assessment of the supplier and its products. Green purchases (products with an environmental label) represented 10.6% of the Group’s total purchases. Similarly, responsible paper (more than 50% recycled or carrying the FSC or PEFC label) represented 10,898 tons of paper purchases. With 45 high defi nition video conference rooms (over nine more scheduled for 2011) and 4 telepresence rooms worldwide, the Group offers its employees an effective and low environmental impact alternative to travelling. 14. Internal department In 2010, the Group set up an Environment team within the CSR Delegation, led by the Group for environmental management Environment Manager. The team defi nes and oversees the Group’s environmental policy in coordination with the CSR/Environment Offi cers in the divisions and entities, with Group ITP 7 (Information, Technology and Processes), which manages IT (PCs and Data centres) for a large part of the Group and the buildings occupied by the Group in France, and with the Group Procurement department. Environmental reporting involves more than one hundred contributors and more than seventy validators at global level. Still within ITP, a team is dedicated to rolling out the ISO 14001 certifi cation approach within Group entities and helped to achieve the results set out in section 12 above. Since 2009, the Procurement department has had CSR/environmental expertise to ensure that environmental issues are taken into account in all supplier relationships. Lastly, in 2010, a Climate Change Steering committee, led by the Executive Committee member responsible for CSR, was set up to oversee all the programmes designed to reduce the Group’s direct and indirect climate impacts.
368 2010 Registration document and fi nancial report - BNP PARIBAS SOCIAL AND ENVIRONMENTAL INFORMATION NRE Appendices – Environmental chapter 7
NRE indicator - 2010 year 15. Environmental training BNP Paribas provides an online CSR training module (in French and English) to raise general and information programmes employee awareness about CSR issues and the Group’s policy in this fi eld. Participants are set for employees six tasks, such as identifying the factors that help reduce the Bank’s direct impacts on the environment, selecting a fi nancing operation taking account of its environmental and social impact, or building up a portfolio of social responsible investments (SRI). This module is also included in the induction course for joiners. The climate specialist Jean Jouzel, Vice-Chair of the IPCC and Nobel Peace Prize winner, answered employees’ questions during a 2-hour online chat, with simultaneous translation in English to enable all employees worldwide to take part. Lastly, a CSR training course currently being rolled out targets more than 70 Group buyers to strengthen their consideration of environmental and social issues in their day-to-day practices. 16. Resources dedicated to mitigation As a responsible lender, BNP Paribas endeavours to reduce the environmental risks of its fi nancial of environmental risks and investment activities. ■ The Group endorsed the Equator Principles in 2008 and systematically includes a non-fi nancial analysis in its project fi nancing business as well as producing an annual report on the results. ■ The Group endorsed the Climate Principles in 2010, deepening this approach and reaffi rming its commitment to a low carbon economy. Several programmes have been set up under the Climate Principles, including a project to improve the assessment of environmental considerations in the risk analysis process. ■ BNP Paribas develops sector policies aiming to reduce environmental risks for the most sensitive sectors. In 2010, BNP Paribas published a policy on the palm oil industry. ■ Reducing environmental risks also involves developing more environmentally friendly products such as SRI funds and the Carbon Finance team dedicated to researching and promoting market solutions for corporate clients seeking to fulfi l their obligations to reduce greenhouse
gas emissions in accordance with the Kyoto Protocol and European directives on CO2 emission quotas. ■ The Group’s subsidiaries are also committed to this approach in their business sectors. For example, under the European Cleaner Car Contracts (CCC) programme, Arval Netherlands
has undertaken to reduce the average emissions from its new vehicle fl eet to 120g of CO2 per kilometre no later than 2012. ■ BNP Paribas continues to take an active part in the various marketplace groups and associations to improve its knowledge about environmental risks and how to mitigate them. It is a member of EpE (Entreprises pour l’Environnement, www.epe-asso.org). 17. Structure to deal with pollution Any crisis situation is managed by an ad hoc committee that includes top managers. incidents extending beyond the Company This committee is responsible for ensuring that appropriate measures are taken and informing the relevant operating entities. Depending on the scale of the incident, information may be passed on to the entire Group, and there may be a call for assistance. As part of the process of validating the operational risk framework, detailed studies were performed to defi ne and reinforce the Business Continuity Plan, in particular in the event of pollution discharges or accidents. 18. Amount of provisions and guarantees USD 3.4 million. The provision is for private litigation and is not intended to cover penalties covering environmental risks for non-compliance with regulations. 7 19. Amount of compensation paid The Group has not been the subject of any adverse court rulings on environmental matters in 2010. following legal decisions relating to the environment 20. Environmental objectives set for All environmental policies and directives apply to the entire Group. The businesses are foreign subsidiaries responsible for implementing the Group’s guiding principles throughout their reporting organisations, including subsidiaries, in all territories. Moreover, environmental reporting involves 17 countries representing 82.9% of the Group’s workforce.
2010 Registration document and fi nancial report - BNP PARIBAS 369
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370 2010 Registration document and fi nancial report - BNP PARIBAS 8 GENERAL INFORMATION
8.1 Documents on display 372
8.2 Material contracts 372
8.3 Dependence on external parties 372
8.4 Signifi cant changes 373
8.5 Investments 373
8.6 Founding documents and Articles of association 374
8.7 Statutory Auditors’ special report on regulated agreements and commitments 379
2010 Registration document and fi nancial report - BNP PARIBAS 371 GENERAL INFORMATION 8 Documents on display
8.1 Documents on display
This document is available on the BNP Paribas website, www.invest.bnpparibas.com, or on the Autorité des Marchés Financiers (AMF) website, www. amf-france.org. Any person wishing to receive additional information concerning the BNP Paribas Group can request documents, without commitment, as follows:
■ by writing to: BNP Paribas - Group Development and Finance Investor Relations and Financial Information 3, rue d’Antin - CAA01B1 75002 Paris France ■ by calling: +33 (0)1 40 14 63 58 Regulated information (in French) about the Group is available on its website at http://invest.bnpparibas.com/fr/pid757/information-r-eglement-ee.html
8.2 Material contracts
To date, BNP Paribas has not entered into any major contracts—other than those entered into during the normal course of business—which creates an obligation or commitment for the entire Group which, if it were not fulfi lled, would entail nullity of the contract.
8.3 Dependence on external parties
In April 2004, BNP Paribas and several of its subsidiaries began Group. Its corporate governance system provides BNP Paribas with a outsourcing data processing operations to the “BNP Paribas Partners for contractual right of oversight and the Group can take back responsibility Innovation” (BP2I) joint venture set up with IBM at the end of 2003. In late for data processing operations if necessary. 2008, BP2I also began handling data processing for the BNL subsidiary. BancWest’s data processing operations are outsourced to Fidelity BNP Paribas exercises signifi cant infl uence over BP2I, which is owned Information Services. Cofi noga France’s data processing is handled by 8 on a 50/50 basis with IBM. BP2I is staffed essentially with BNP Paribas SDDC, which is wholly-owned by IBM. employees and its offi ces and data processing centres are owned by the
372 2010 Registration document and fi nancial report - BNP PARIBAS GENERAL INFORMATION Investments 8
8.4 Signifi cant changes
There has been no signifi cant change in the Group’s fi nancial or business situation since the end of the last fi nancial year for which audited financial statements have been published, and most notably since the date of the Statutory Auditor’s report on the consolidated fi nancial statements (7 March 2011).
8.5 Investments
Investments individually valued at over EUR 500 million are considered material at the Group level and consist of the following since 1 January 2008. Announcement Country date Transaction Transaction amount Comments Joint acquisition of Steen & Strøm, a Norwegian real estate company, with ABP, a Dutch pension fund. EUR 628m Majority ownership with ABP Norway 28 July 2008 Klépierre’s stake: 56.1% (for Klépierre’s stake) as the minority shareholder The acquisitions of Fortis Bank SA and BGL SA in May 2009 Acquisition of 74.93% will let BNP Paribas expand of Fortis Bank’s shares and its integrated banking model voting rights (Fortis Bank owns Issue of 133,435,603 into two new domestic 50% + one share of BGL), BNP Paribas shares markets, Belgium and and of a 15.96% direct stake (for EUR 6,265m Luxembourg, building on (shares and voting rights) based on the share prices its two current domestic Belgium 6 October 2008 in BGL SA on the issue dates) markets, France and Italy The acquisition of a 25% stake in Fortis Insurance Belgium (AG Insurance) gives Acquisition by Fortis Bank of 25% BNP Paribas a close industrial + one share of Fortis Insurance EUR 1,375m partner in Belgium’s Belgium 8 March 2009 Belgium (AG Insurance) (for the 25% stake) bancassurance industry An agreement between BNP Paribas and Intesa Sanpaolo to increase BNP Paribas’ stake in Findomestic, a consumer credit EUR 517m company initially 50%-owned (for the 25% stake BNP Paribas 8 Italy 4 August 2009 by each group, to 75% before the share issue) takes control of Findomestic
The fi nancing for the acquisition of Fortis Bank is described in note 8.d to the fi nancial statements, titled “Business combinations”.
2010 Registration document and fi nancial report - BNP PARIBAS 373 GENERAL INFORMATION 8 Founding documents and Articles of association
8.6 Founding documents and Articles of association
BNP Paribas’ Articles of association are available on the Group’s website, SECTION II www.invest.bnpparibas.com, and can be obtained from the address given in Section 8.1. Below are the full Articles of association as of 17 January 2011. SHARE CAPITAL – SHARES Article 4 SECTION I The share capital of BNP PARIBAS shall stand at 2,397,320,312 euros divided into 1,198,660,156 fully paid-up shares with a nominal value of 2 euros each. FORM – NAME – REGISTERED OFFICE – Article 5 CORPORATE PURPOSE The fully paid-up shares shall be held in registered or bearer form at Article 1 the shareholders discretion, subject to the French legal and regulatory BNP PARIBAS is a French Public Limited Company (société anonyme) provisions in force. licensed to conduct banking operations under the French Monetary and The Shares shall be registered in an account in accordance with the terms Financial Code, Book V, Section 1 (Code Monétaire et Financier, Livre V, and conditions set out in the applicable French laws and regulations in er Titre 1 ) governing banking sector institutions. force. They shall be delivered by transfer from one account to another. The Company was founded pursuant to a Decree dated 26 May 1966. The Company may request disclosure of information concerning the Its legal life has been extended to 99 years from September 17, 1993. ownership of its shares in accordance with the provisions of article Apart from the specifi c rules relating to its status as an establishment in L.228-2 of the French Commercial Code (Code de Commerce). the banking sector (Book V, Section 1 of the French Monetary and Financial Without prejudice to the legal thresholds set in article L.233-7, Code - Code Monétaire et Financier, Livre V, Titre 1er), BNP Paribas shall paragraph 1 of the French Commercial Code (Code de Commerce), any be governed by the provisions of the French Commercial Code (Code shareholder, whether acting alone or in concert, who comes to directly de Commerce) concerning commercial companies, as well as by these or indirectly hold at least 0.5% of the share capital or voting rights of Articles of Association. BNP PARIBAS, or any multiple of that percentage less than 5%, shall be Article 2 required to notify BNP PARIBAS by registered letter with return receipt The registered office of BNP PARIBAS shall be located in Paris (9th within the timeframe set out in article L.233-7 of the French Commercial arrondissement), at 16, Boulevard des Italiens (France). Code (Code de Commerce). Article 3 Above 5%, the duty of disclosure provided for in the previous paragraph shall apply to 1% increments of the share capital or voting rights. The purpose of BNP PARIBAS shall be to provide and conduct the following services with any individual or legal entity, in France and abroad, subject The disclosures described in the previous two paragraphs shall also apply to compliance with the French laws and regulations applicable to credit when the shareholding falls below the above-mentioned thresholds. institutions licensed by the Credit Institutions and Investment Firms Failure to report either legal or statutory thresholds shall result in loss of committee (Comité des Etablissements de Crédit et des Entreprises voting rights as provided for by article L.233-14 of the French Commercial d’Investissement): Code (Code de Commerce) at the request of one or more shareholders ■ any and all investment services; jointly holding at least 2% of the Company’s share capital or voting rights. ■ any and all services related to investment services; Article 6 ■ any and all banking transactions; Each share shall grant a right to a part of ownership of the Company’s ■ any and all services related to banking transactions; assets and any liquidation surplus that is equal to the proportion of share 8 ■ any and all equity investments; capital that it represents. as defi ned in the French Monetary and Financial Code Book III – Section 1 In cases where it is necessary to hold several shares in order to exercise (Code Monétaire et Financier, Livre III, Titre 1er) governing banking certain rights, and in particular where shares are exchanged, combined transactions and Section II (Titre II) governing investment services and or allocated, or following an increase or reduction in share capital, related services. regardless of the terms and conditions thereof, or subsequent to a On a regular basis, BNP PARIBAS may also conduct any and all other merger or any other transaction, it shall be the responsibility of those activities and any and all transactions in addition to those listed above, in shareholders owning less than the number of shares required to exercise particular any and all arbitrage, brokerage and commission transactions, those rights to combine their shares or, if necessary, to purchase or sell subject to compliance with the regulations applicable to banks. the number of shares or voting rights leading to ownership of the required percentage of shares. In general, BNP PARIBAS may, on its own behalf, and on behalf of third parties or jointly therewith, perform any and all fi nancial, commercial, industrial or agricultural, personal property or real estate transactions directly or indirectly related to the activities set out above or which further the accomplishment thereof.
374 2010 Registration document and fi nancial report - BNP PARIBAS GENERAL INFORMATION Founding documents and Articles of association 8
SECTION III Article 9 The Board of directors shall meet as often as necessary for the best interests of the Company. Board meetings shall be called by the GOVERNANCE Chairman. Where requested by at least one-third of the directors, the Article 7 Chairman may call a Board meeting with respect to a specifi ed agenda, The Company shall be governed by a Board of directors composed of: even if the last Board meeting was held less than two months previously. The Chief Executive Offi cer may also request that the Chairman call a 1/ Directors appointed by the ordinary general Shareholders’ Meeting Board meeting to discuss a specifi ed agenda. There shall be at least nine and no more than eighteen directors. Directors Board meetings shall be held either at the Company’s registered offi ce elected by the employees shall not be included when calculating the or at any other location specifi ed in the notice of meeting. minimum and maximum number of directors. Notices of meetings may be served by any means, including verbally. They shall be appointed for a three-year term. The Board of directors may meet and hold valid proceedings at any time, When a director is appointed to replace another director, in accordance even if no notice of meeting has been served, provided all its members with applicable French laws and regulations in force, the new director’s are present or represented. term of offi ce shall be limited to the remainder of the predecessor’s term. Article 10 A director’s term of offi ce shall terminate at the close of the ordinary general Shareholders’ Meeting called to deliberate on the fi nancial Board meetings shall be chaired by the Chairman, by a director statements for the previous fi nancial year and held in the year during recommended by the Chairman for the purpose or, failing this, by the which the director’s term of offi ce expires. oldest director present. Directors may be re-appointed, subject to the provisions of French law, Any director may attend a Board meeting and take part in its deliberations in particular with regard to their age. by videoconference (visioconférence) or all telecommunications and remote transmission means, including Internet, subject to compliance Each director, including directors elected by employees, must own at with the conditions set out in applicable legislation at the time of its use. least 10 Company shares. Any director who is unable to attend a Board meeting may ask to be 2/ Directors elected by BNP PARIBAS SA employees represented by a fellow director, by granting a written proxy, valid for The status of these directors and the related election procedures shall only one specifi c meeting of the Board. Each director may represent only be governed by articles L.225-27 to L.225-34 of the French Commercial one other director. Code (Code de Commerce) as well as by the provisions of these Articles At least half of the Board members must be present for decisions taken of Association. at Board meetings to be valid. There shall be two such directors – one representing executive staff and Should one or both of the positions of member of the Board elected by one representing non-executive staff. employees remain vacant, for whatever reason, without the possibility They shall be elected by BNP PARIBAS SA employees. of a replacement as provided for in article L.225-34 of the French They shall be elected for a three-year term. Commercial Code (Code de Commerce), the Board of directors shall be validly composed of the members elected by the general Shareholders’ Elections shall be organised by the Executive Management. The timetable Meeting and may validly meet and vote. and terms and conditions for elections shall be drawn up by the Executive Management in agreement with the national trade union representatives Members of the Company’s Executive Management may, at the request within the Company such that the second round of elections shall be of the Chairman, attend Board meetings in an advisory capacity. held no later than fi fteen days before the end of the term of offi ce of the A full member of the Company’s Central Works committee, appointed outgoing directors. by said committee, shall attend Board meetings in an advisory capacity, Each candidate shall be elected on a majority basis after two rounds held subject to compliance with the provisions of French legislation in force. in each of the electoral colleges. Decisions shall be taken by a majority of directors present or represented. Each application submitted during the fi rst round of elections shall In the event of a split decision, the Chairman of the meeting shall have include both the candidate’s name and the name of a replacement if any. the casting vote, except as regards the proposed appointment of the 8 Chairman of the Board of directors. Applications may not be amended during the second round of elections. The decisions taken by the Board of directors shall be recorded in minutes The candidates shall belong to the electoral college where they present drawn up in a special register prepared in accordance with French for election. legislation in force and signed by the Chairman of the meeting and one Applications other than those presented by a trade union representative of the directors who attended the meeting. within the Company must be submitted together with a document The Chairman of the meeting shall appoint the Secretary to the Board, featuring the names and signatures of one hundred electors belonging who may be chosen from outside the Board’s membership. to the electoral college where the candidate is presenting for election. Copies or extracts of Board minutes may be signed by the Chairman, the Article 8 Chief Executive Offi cer, the Chief Operating Offi cers or any representative The Chairman of the Board of directors shall be appointed from among specifi cally authorised for such purpose. the members of the Board of directors. At the proposal of the Chairman, the Board of directors may appoint one or more Vice-Chairmen.
2010 Registration document and fi nancial report - BNP PARIBAS 375 GENERAL INFORMATION 8 Founding documents and Articles of association
Article 11 In the event that the Board of directors decides that the Executive The ordinary general Shareholders’ Meeting may grant directors’ fees Management shall be ensured by the Chairman of the Board, the under the conditions provided for by French law. provisions of these Articles of Association concerning the Chief Executive Offi cer shall apply to the Chairman of the Board of directors who will The Board of directors shall divide up these fees among its members as in such case assume the title of Chairman and Chief Executive Offi cer. it deems appropriate. He shall be deemed to have automatically resigned at the close of the The Board of directors may grant exceptional compensation for specifi c general Shareholders’ Meeting held to approve the fi nancial statements assignments or duties performed by the directors under the conditions for the year in which he reaches sixty-fi ve years of age. applicable to agreements subject to approval, in accordance with the In the event that the Board of directors decides that such duties should be provisions of articles L.225-38 to L.225-43 of the French Commercial Code separated, the Chairman shall be deemed to have automatically resigned (Code de Commerce). The Board may also authorise the reimbursement at the close of the general Shareholders’ Meeting held to approve the of travel and business expenses and any other expenses incurred by the fi nancial statements for the year in which he reaches sixty-eight years directors in the interests of the Company. of age. However, the Board may decide to extend the term of offi ce of the Chairman of the Board until the close of the general Shareholders’ Meeting held to approve the fi nancial statements for the year in which SECTION IV he reaches sixty-nine years of age. The Chief Executive Offi cer shall be deemed to have automatically resigned at the close of the general DUTIES OF THE BOARD OF DIRECTORS, Shareholders’ Meeting held to approve the fi nancial statements for the year in which he reaches sixty-three years of age. However, the Board may THE CHAIRMAN, THE EXECUTIVE decide to extend the term of offi ce of the Chief Executive Offi cer until the MANAGEMENT AND THE NON-VOTING close of the general Shareholders’ Meeting held to approve the fi nancial DIRECTORS (CENSEURS) statements for the year in which he reaches sixty-four years of age. Article 12 Article 15 The Board of directors shall determine the business strategy of The Chief Executive Offi cer shall be vested with the broadest powers to BNP PARIBAS and supervise the implementation thereof. Subject to act in all circumstances in the name of BNP PARIBAS. He shall exercise the powers expressly conferred upon the Shareholders’ Meetings and these powers within the limit of the corporate purpose and subject to within the limit of the corporate purpose, the Board shall handle any those powers expressly granted by French law to Shareholders’ Meetings issue concerning the smooth running of BNP PARIBAS and settle matters and the Board of directors. concerning the Company pursuant to its deliberations. The Board of He shall represent BNP PARIBAS in its dealings with third parties. directors shall receive from the Chairman or the Chief Executive Offi cer BNP PARIBAS shall be bound by the actions of the Chief Executive Offi cer all of the documents and information required to fulfi l its duties. even if such actions are beyond the scope of the corporate purpose, The Board of directors’ decisions shall be executed by either the unless BNP PARIBAS can prove that the third party knew that the Chairman, the Chief Executive Offi cer or the Chief Operating Offi cers, or action concerned was beyond the scope of the corporate purpose or by any special representative appointed by the Board. had constructive knowledge thereof in view of the circumstances. The publication of the Company’s Articles of Association alone shall not At the proposal of the Chairman, the Board of directors may decide to set constitute such proof. up committees responsible for performing specifi c tasks. The Chief Executive Offi cer shall be responsible for the organisation and Article 13 procedures of internal control and for all information required by French The Chairman shall organise and manage the work of the Board of law regarding the Internal control report. directors and report thereon to the general Shareholders’ Meeting. The Board of directors may limit the powers of the Chief Executive Offi cer, The Chairman shall also oversee the smooth running of BNP PARIBAS’S but such limits shall not be valid against claims by third parties. management bodies and ensure, in particular, that the directors are in a position to fulfi l their duties. The Chief Executive Offi cer may delegate partial powers, on a temporary or permanent basis, to as many persons as he sees fi t, with or without The remuneration of the Chairman of the Board shall be freely determined the option of redelegation. 8 by the Board of directors. The remuneration of the Chief Executive Offi cer shall be freely determined Article 14 by the Board of directors. The Board of directors shall decide how to organise the executive The Chief Executive Offi cer may be removed from offi ce by the Board of management of the Company. The executive management of the Company directors at any time. Damages may be payable to the Chief Executive shall be ensured under his own liability either by the Chairman of the Offi cer if he is unfairly removed from offi ce, except where the Chief Board of directors or by another individual appointed by the Board of Executive Offi cer is also the Chairman of the Board of directors. directors and bearing the title of Chief Executive Offi cer. In the event that the Chief Executive Offi cer is a director, the term of Shareholders and third parties shall be informed of this choice in his offi ce as Chief Executive Offi cer shall not exceed that of his term of accordance with the regulatory provisions in force. offi ce as a director. The Board of directors shall have the right to decide that this choice be for a fi xed term.
376 2010 Registration document and fi nancial report - BNP PARIBAS GENERAL INFORMATION Founding documents and Articles of association 8
Article 16 Any shareholder may, subject to providing proof of identity, attend a At the proposal of the Chief Executive Offi cer, the Board of directors may, general Shareholders’ Meeting, either in person, by returning a postal within the limits of French law, appoint one or more individuals, called vote or by designating a proxy. Chief Operating Offi cers, responsible for assisting the Chief Executive Share ownership is evidenced by an entry either in the BNP PARIBAS’ Offi cer. share register in the name of the shareholder, or in the register of In agreement with the Chief Executive Offi cer, the Board of directors bearer shares held by the applicable authorised intermediary, within shall determine the scope and term of the powers granted to the Chief the deadlines and under the conditions provided for by the regulations Operating Officers. However, as far as third parties are concerned, in force. In the case of bearer shares, the authorised intermediary shall the Chief Operating Offi cers shall have the same powers as the Chief provide a certifi cate of participation for the shareholders concerned. Executive Offi cer. The deadline for returning postal votes shall be determined by the Board When the Chief Executive Offi cer ceases to perform his duties or is of directors and stated in the notice of meeting published in the French prevented from doing so, the Chief Operating Officers shall, unless legal announcements journal (Bulletin des Annonces Légales Obligatoires the Board of directors decides otherwise, retain their positions and – BALO). responsibilities until a new Chief Executive Offi cer is appointed. At all general Shareholders’ Meetings, the voting right attached to the The remuneration of the Chief Operating Officers shall be freely shares bearing benefi cial rights shall be exercised by the benefi cial owner. determined by the Board of directors, at the proposal of the Chief If the Board of directors so decides at the time that the Shareholders’ Executive Offi cer. Meeting is called, the public broadcasting of the entire Shareholders’ The Chief Operating Offi cers may be removed from offi ce by the Board Meeting by videoconference (visioconférence) or all telecommunications of directors at any time, at the proposal of the Chief Executive Offi cer. and remote transmission means, including Internet, shall be authorised. Damages may be payable to the Chief Operating Offi cers if they are Where applicable, this decision shall be communicated in the notice of unfairly removed from offi ce. meeting published in the French legal announcements journal (Bulletin des Annonces Légales Obligatoires – BALO). Where a Chief Operating Offi cer is a director, the term of his offi ce as Chief Operating Offi cer may not exceed that of his term of offi ce as a director. Any shareholder may also, if the Board of directors so decides at the time of issuing the notice of Shareholders’ Meeting, take part in the vote by The Chief Operating Offi cers’ terms of offi ce shall expire at the latest at videoconference (visioconférence) or all telecommunications and remote the close of the general Shareholders’ Meeting called to approve the transmission means, including Internet, subject to compliance with the fi nancial statements for the year in which the Chief Operating Offi cers conditions set out in applicable legislation at the time of its use. If an reach sixty-fi ve years of age. electronic voting form is used, the shareholder’s signature may be in Article 17 the form of a secure digital signature or a reliable identifi cation process safeguarding the link with the document to which it is attached and At the proposal of the Chairman, the Board of directors may appoint one may consist, in particular, of a user identifi er and a password. Where or two non-voting directors (censeurs). applicable, this decision shall be communicated in the notice of meeting Notices of meetings shall be served to non-voting directors, who shall published in the French legal announcements journal (Bulletin des attend Board meetings in an advisory capacity. Annonces Légales Obligatoires – BALO). They shall be appointed for six years and may be reappointed for further terms. They may also be dismissed at any time under similar conditions. SECTION VI They shall be selected from among the Company’s shareholders and their remuneration shall be determined by the Board of directors. STATUTORY AUDITORS SECTION V Article 19 At least two principal statutory auditors and at least two deputy statutory auditors shall be appointed by the general Shareholders’ Meeting for a SHAREHOLDERS’ MEETINGS term of six fi nancial years. Their term of offi ce shall expire after approval Article 18 of the fi nancial statements for the sixth financial year. 8 General Shareholders’ Meetings shall be composed of all shareholders. General Shareholders’ Meetings shall be called and held subject to SECTION VII compliance with the provisions of the French Commercial Code (Code de Commerce). ANNUAL FINANCIAL STATEMENTS They shall be held either at the head offi ce or at any other location specifi ed in the notice of meeting. Article 20 st They shall be chaired by the Chairman of the Board of directors, or, in his The Company’s financial year shall start on January 1 and end on st absence, by a director appointed for this purpose by the Shareholders’ December 31 . Meeting. At the end of each fi nancial year, the Board of directors shall draw up annual fi nancial statements and write a management report on the Company’s financial position and its business activities during the previous year.
2010 Registration document and fi nancial report - BNP PARIBAS 377 GENERAL INFORMATION 8 Founding documents and Articles of association
Article 21 SECTION VIII Net income is composed of income for the year minus costs, depreciation, amortizations and impairment. DISSOLUTION The distributable profi t is made up of the year’s profi t, minus previous Article 22 losses as well as the sums to be allocated to the reserves in accordance with French law, plus the profi t carried forward. Should BNP PARIBAS be dissolved, the shareholders shall determine the form of liquidation, appoint the liquidators at the proposal of the Board The general Shareholders’ Meeting is entitled to levy all sums from of directors and, in general, take on all of the duties of the general the distributable profi t to allocate them to all optional, ordinary or Shareholders’ Meeting of a French Public Limited Company (société extraordinary reserves or to carry them forward. anonyme) during the liquidation and until such time as it has been The general Shareholders’ Meeting may also decide to distribute sums completed. levied from the reserves at its disposal. However, except in the event of a capital reduction, no amounts may be distributed to the shareholders if the shareholders’ equity is, or would SECTION IX become following such distribution, lower than the amount of capital plus the reserves which is not open to distribution pursuant to French DISPUTES law or these Articles of Association. Article 23 In accordance with the provisions of article L.232-18 of the French Commercial Code (Code de Commerce), a general Shareholders’ Meeting Any and all disputes that may arise during the life of BNP PARIBAS or may offer to the shareholders an option for the payment, in whole or during its liquidation, either between the shareholders themselves or in part, of dividends or interim dividends through the issuance of new between the shareholders and BNP PARIBAS, pursuant to these Articles shares in the Company. of Association, shall be ruled on in accordance with French law and submitted to the courts having jurisdiction.
8
378 2010 Registration document and fi nancial report - BNP PARIBAS GENERAL INFORMATION Statutory Auditors’ special report on regulated agreements and commitments 8
8.7 Statutory Auditors’ special report on regulated agreements and commitments
Deloitte & Associés PricewaterhouseCoopers Audit Mazars
185, avenue Charles de Gaulle 63, rue de Villiers 61, rue Henri Regnault 92524 Neuilly-sur-Seine Cedex 92208 Neuilly-sur-Seine Cedex 92400 Courbevoie
This is a free translation into English of the Statutory Auditors’ special report on regulated agreements and commitments issued in French and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
BNP Paribas 16, boulevard des Italiens 75009 Paris
To the Shareholders,
In our capacity as Statutory Auditors of BNP Paribas, we hereby present our report on regulated agreements and commitments. We are required to report to shareholders, based on the information provided, on the main terms and conditions of the agreements and commitments that have been disclosed to us, without commenting on their relevance or substance or identifying any undisclosed agreements or commitments. Under the provisions of article R.225-31 of the French Commercial Code (Code de Commerce), it is the responsibility of the shareholders to determine whether the agreements and commitments are appropriate and should be approved. Where applicable, it is also our responsibility to provide shareholders with the information required by article R.225-31 of the French Commercial Code in relation to the implementation during the year of agreements and commitments already approved by the Annual General Meeting. We performed our procedures in accordance with professional standards applicable in France. These standards require us to perform procedures to verify that the information given to us agrees with the underlying documents.
AGREEMENTS AND COMMITMENTS SUBMITTED FOR THE APPROVAL OF THE ANNUAL GENERAL MEETING
Agreements and commitments authorised during the year Pursuant to article L225-40 of the French Commercial Code, we were informed of the following agreement previously authorised by your Board of directors.
■ Agreement setting out relations with AXA (approved by the Meeting of the Board of directors on 30 July 2010) director concerned: 8 - Michel Pébereau, Member of the Board of directors of AXA. At its meeting on 30 July 2010, the Board of directors of BNP Paribas authorised the signing of an agreement between BNP Paribas and AXA. The agreement entered into on 5 August 2010 between BNP Paribas (acting on its own behalf and on behalf of the BNP Paribas Group) and AXA (acting on its own behalf and on behalf of the AXA group) came into force at the date of its signature and replaced as of that date the previous agreement entered into on 15 December 2005. The agreement provides for a mutual obligation to inform the other in the event of a change in cross-holdings between the groups. Under the agreement, each party also has a call option on the other’s shareholding, exercisable in the event of a hostile takeover of either party. In the event of a hostile takeover of BNP Paribas by a third party, the AXA group will have the option to buy back all or a portion of the interest still held by the BNP Paribas Group in AXA at the date on which the call option is exercised. Similarly, in the event of a hostile takeover of AXA by a third party, the BNP Paribas Group will have an identical call option on the interest held by the AXA group in BNP Paribas.
2010 Registration document and fi nancial report - BNP PARIBAS 379 GENERAL INFORMATION 8 Statutory Auditors’ special report on regulated agreements and commitments
The agreement is for an initial term of three years as from its entry in force on 5 August 2010. It is automatically renewable for consecutive periods of one year, unless express notice of termination is given by one of the parties at least three months in advance of its expiry date.
The agreement was announced by the French fi nancial markets authority (Autorité de Marchés fi nanciers – AMF) on 9 August 2010.
AGREEMENTS AND COMMITMENTS PREVIOUSLY APPROVED BY THE ANNUAL GENERAL MEETING
Agreements and commitments approved in previous years which were implemented during the year Pursuant to article R.225-30 of the French Commercial Code, we were informed that the following agreement, approved in prior years by the Annual General Meeting, was implemented during the year.
■ Agreement setting out relations with AXA (authorised by the Meeting of the Board of directors on 23 November 2005)
This agreement was replaced by the agreement signed on 5 August 2010, which is described in the previous section, “Agreements and commitments authorised during the year”. Neuilly-sur-Seine and Courbevoie, 7 March 2011
The Statutory Auditors
Deloitte & Associés PricewaterhouseCoopers Audit Mazars
Pascal Colin Patrice Morot Guillaume Potel
8
380 2010 Registration document and fi nancial report - BNP PARIBAS 9 STATUTORY AUDITORS
9.1. Statutory Auditors 382
2010 Registration document and fi nancial report - BNP PARIBAS 381 STATUTORY AUDITORS 9 Statutory Auditors
9.1. Statutory Auditors
Deloitte & Associés PricewaterhouseCoopers Audit Mazars
185, avenue Charles de Gaulle 63, rue de Villiers 61, rue Henri Regnault 92524 Neuilly-sur-Seine Cedex 92208 Neuilly-sur-Seine Cedex 92400 Courbevoie
- Deloitte & Associés was appointed as Statutory Auditor at the Annual General Meeting of 23 May 2006 for a six-year period expiring at the close of the Annual General Meeting called in 2012 to approve the fi nancial statements for the year ending 31 December 2011. Deloitte & Associés is represented by Pascal Colin. Deputy: BEAS, 7-9, villa Houssay, Neuilly-sur-Seine (92), France, SIREN No. 315 172,445, Nanterre trade and companies register. - PricewaterhouseCoopers audit was re-appointed as Statutory Auditor at the Annual General Meeting of 23 May 2006 for a six-year period expiring at the close of the Annual General Meeting called in 2012 to approve the fi nancial statements for the year ending 31 December 2011. The fi rm was first appointed at the Annual General Meeting of 26 May 1994. PricewaterhouseCoopers Audit is represented by Patrice Morot. Deputy: Pierre Coll, 63, rue de Villiers, Neuilly-sur-Seine (92), France. - Mazars was re-appointed as Statutory Auditor at the Annual General Meeting of 23 May 2006 for a six-year period expiring at the close of the Annual General Meeting called in 2012 to approve the fi nancial statements for the year ending 31 December 2011. The fi rm was fi rst appointed at the Annual General Meeting of 23 May 2000. Mazars is represented by Guillaume Potel. Deputy: Michel Barbet-Massin, 61 rue Henri-Regnault, Courbevoie (92), France.
Deloitte & Associés, PricewaterhouseCoopers, and Mazars are registered as Statutory Auditors with the Versailles Regional Association of Statutory Auditors, under the authority of the French National Accounting Oversight Board (Haut Conseil du Commissariat aux comptes).
9
382 2010 Registration document and fi nancial report - BNP PARIBAS PERSON RESPONSIBLE 10 FOR THE REGISTRATION DOCUMENT
10.1. Person responsible for the Registration document and the annual fi nancial report 384
10.2. Statement by the person responsible for the Registration document 384
2010 Registration document and fi nancial report - BNP PARIBAS 383 PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT 10 Person responsible for the Registration document and the annual fi nancial report
10.1. Person responsible for the Registration document and the annual fi nancial report
Baudouin Prot, Chief Executive Offi cer of BNP Paribas.
10.2. Statement by the person responsible for the Registration document
I hereby declare that to the best of my knowledge, and having taken all reasonable precautions, the information contained in the Registration document is in accordance with the facts and contains no omission likely to affect its import. I further declare that to the best of my knowledge, the accounts are prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, fi nancial position, and profi t or loss of the Company and all the undertakings in the consolidation taken as a whole, and that the information provided in the management report (whose contents are listed in the Table of Concordance on page 387) includes a fair review of the development and performance of the business, profi t or loss and fi nancial position of the Company and the undertakings in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. I obtained a statement from the Statutory Auditors, Deloitte & Associés, PricewaterhouseCoopers Audit, and Mazars, at the end of their assignment, in which they confi rm having verifi ed the information regarding the fi nancial position and the accounts contained herewithin, and having examined the entire Registration document. The Statutory Auditors’ report on the fi nancial statements for the year ended 31 December 2010 presented in this Registration document is given on pages 335–336 and contains an observation. The Statutory Auditors’ report on the consolidated fi nancial statements for the year ended 31 December 2008 presented in the Registration document fi led with the AMF under visa number D09-0114 is given on pages 244–246 of the aforementioned Registration document, and contains an observation.
Paris, 11 March 2011 Chief Executive Offi cer Baudouin PROT
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384 2010 Registration document and fi nancial report - BNP PARIBAS 11 TABLE OF CONCORDANCE
In order to assist readers of the Registration document, the following table of concordance cross-references the main headings required by Annex 1 of European Commission Regulation (EC) No. 809/2004 pursuant to the “Prospectus” Directive.
Headings as listed by Annex 1 of European Commission Regulation (EC) No. 809/2004 Page number 1. Persons responsible 384 2. Statutory auditors 382 3. Selected fi nancial information 3.1. Historical fi nancial information 4 3.2. Financial information for interim periods n/a 4. Risk factors 131-171; 262-291 5. Information about the issuer 5.1. History and development of the issuer 5 5.2. Investments 236-240; 334; 373 6. Business overview 6.1. Principal activities 6-15; 128-130 6.2. Principal markets 6-15; 128-130 6.3. Exceptional events n/a 6.4. Possible dependency 372 6.5. Basis for any statements made by the issuer regarding its competitive position 6-15 7. Organisational structure 7.1. Brief description 4 7.2. List of signifi cant subsidiaries 212-233; 331-333 8. Property, plant, and equipment 8.1. Existing or planned material tangible fi xed assets 187-188; 314 8.2. Environmental issues that may affect the issuer’s utilisation of the tangible fi xed assets 366-369 9. Operating and fi nancial review 9.1. Financial situation 104-106; 298-299 9.2. Operating results 104-105; 298
2010 Registration document and fi nancial report - BNP PARIBAS 385 TABLE OF CONCORDANCE 11
Headings as listed by Annex 1 of European Commission Regulation (EC) No. 809/2004 Page number 10. Capital resources 10.1. Issuer’s capital resources 108-109; 327 10.2. Sources and amounts of cash fl ows 107 10.3. Borrowing requirements and funding structure 250-251 10.4 Information regarding any restrictions on the use of capital resources that have materially affected, or could materially affect, the issuer’s operations n/a 10.5. Anticipated sources of funds n/a 11. Research and development, patents, and licences n/a 12. Trend information 99-100 13. Profi t forecasts or estimates n/a 14. Administrative, management, and supervisory bodies, and senior management 14.1. Administrative and management bodies 30-40; 70 14.2. Administrative and management bodies’ confl icts of interest 45; 240-248 15. Remuneration and benefi ts 15.1. Amount of remuneration paid and benefi ts in kind granted 40-41; 240-248 15.2. Total amounts set aside or accrued by the issuer or its subsidiaries to provide pension, retirement, or similar benefi ts 240-248 16. Board practices 16.1. Date of expiry of the current terms of offi ce 30-40 16.2. Information about members of the administrative bodies’ service contracts with the issuer n/a 16.3. Information about the audit committee and remuneration committee 50-53; 56 16.4. Corporate governance regime in force in the issuer’s country of incorporation 42 17. Employees 17.1. Number of employees 338-339; 343 17.2. Shareholdings and stock options 198-203; 240-248; 352 17.3. Description of any arrangements for involving the employees in the capital of the issuer 352 18. Major shareholders 18.1. Shareholders owning more than 5% of the issuer’s capital or voting rights 17-18 18.2. Existence of different voting rights 16 18.3. Control of the issuer 17 18.4. Description of any arrangements, known to the issuer, the operation of which may at a subsequent date result in a change of Control of the issuer 17-18 19. Related party transactions 240-250 20. Financial information concerning the issuer’s assets and liabilities, fi nancial position, and profi ts and losses 20.1. Historical fi nancial information 4; 104-253; 298-334 20.2. Pro forma fi nancial information n/a
386 2010 Registration document and fi nancial report - BNP PARIBAS TABLE OF CONCORDANCE 11
Headings as listed by Annex 1 of European Commission Regulation (EC) No. 809/2004 Page number 20.3. Financial statements 104-253; 298-329 20.4. Auditing of historical annual fi nancial information 254-255; 335-336 20.5. Age of latest fi nancial information 101-103; 297 20.6. Interim and other fi nancial information n/a 20.7. Dividend policy 25 20.8. Legal and arbitration proceedings 252 20.9. Signifi cant change in the issuer’s fi nancial or trading position 373 21. Additional information 21.1. Share capital 16; 203-212; 316-318; 322-327; 374 21.2. Memorandum and Articles of association 374-378 22. Material contracts 372 23. Third party information and statement by experts and declarations of interest n/a 24. Documents on display 372 25. Information on holdings 186-187; 331-33
In order to assist readers of the annual fi nancial report, the following table cross-references the information required by article L.451-1-2 of the French Monetary and Financial Code.
Annual fi nancial report Page number Statement by the person responsible for the Registration document 384 Management report 72-97; 131-171; ■ Review of the parent company’s and consolidated group’s profi t or loss, fi nancial position, risks, and share issue 203-212; 258-296; authorisations (articles R.225-100 and L.225-100-2 of the French Commercial Code) 322-326
■ Information about items that could affect a public offer, as required by Article L.225-100-3 of the French Commercial Code n/a
■ Information about share buybacks (article R.225-211, paragraph 2, of the French Commercial Code) 208-209 Financial statements
■ Parent company fi nancial statements 298-329
■ Statutory Auditors’ report on the fi nancial statements 335-336
■ Consolidated fi nancial statements 104-253
■ Statutory Auditors’ report on the consolidated fi nancial statements 254-255
Pursuant to Article 28 of European Commission Regulation (EC) ■ the consolidated financial statements for the year ended No. 809/2004 on prospectuses, the following items are incorporated 31 December 2008 and the Statutory Auditors’ report on the by reference: consolidated fi nancial statements for the same period, presented respectively on pages 97–243 and 244-246 of Registration document ■ the consolidated financial statements for the year ended no. D09-0114 fi led with the AMF on 11 March 2009. 31 December 2009 and the Statutory Auditors’ report on the consolidated fi nancial statements for the same period, presented The chapters of Registration documents no. D10-0102 and no. D09-0114 respectively on pages 103–243 and 244-246 of Registration document not referred to above are either not signifi cant for investors or are covered no. D10-0102 fi led with the AMF on 11 March 2010; in another section of this Registration document.
2010 Registration document and fi nancial report - BNP PARIBAS 387
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